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UPDATE: Morgan Stanley Reiterates On Manitowoc Following Trade Show

Dwight Einhorn

In a report published Tuesday, Morgan Stanley analyst Nicole DeBlase reiterated an Overweight rating on Manitowoc (NYSE: MTW), but removed the $36.00 price target.

In the report, Morgan Stanley noted, “Yesterday, we attended the National Restaurant Association (NRA) trade show in Chicago, where we met with MTW management, including Carl Laurino (CFO) and Bob Hund (President, Foodservice). We also met with Middleby (not covered by MS) and ITW (covered by Nigel Coe). Below, we include our key takeaways from the show.

"Show attendance and interest in equipment was encouraging. MTW CEO Glen Tellock noted that traffic at the booth was encouragingly busy throughout the trade show, and customer interest in the company's new products was strong. However, we would not read too much into this, given that MTW's Foodservice core growth has been in the 8-9% range throughout the past two quarters already, and this tends to be unsustainable in the Foodservice business, where cross-cycle industry growth tends to sit in the 3-5% range. In fact, Middleby noted that growth has been stable rather than accelerating during 2Q (vs. 9% organic growth in 1Q).

"That said, commentary at the show probably underwrites MTW's outlook for MSD growth in Foodservice business in 2014e, at a minimum.”

Manitowoc closed on Monday at $27.95.

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