24/7 Wall St. » DHR

After the Sell-Off: Value & Upside In Major Industrials (APD, BA, CAT, DE, DOW, DD, DHR, ITW)

Administrator — Wed, 23 May 2012 14:25:39 +0000

Summer can often be an interesting time in the markets and so far the “Sell in May and go away!” them has worked. What has also taken place is that many of these stocks have sold off to levels where they are either well off their highs or to where these offer value and upside to the consensus price targets. We have covered this in gold miners and in major oil outfits, but we are taking a look at the value and upside in many of the key industrial names which are key drivers and barometers of the U.S. economy.

24/7 Wall St. has gone through the industrial products, chemicals, and heavy equipment makers to see which outfits offer investors the least risk and most reward. Consensus targets are from Thomson Reuters and we have evaluated the following: Air Products & Chemicals Inc. (NYSE: APD); The Boeing Company (NYSE: BA); Caterpillar Inc. (NYSE: CAT); Deere & Company (NYSE: DE); The Dow Chemical Company (NYSE: DOW); E. I. du Pont de Nemours and Company (NYSE: DD); Danaher Corp. (NYSE: DHR); and Illinois Tool Works Inc. (NYSE: ITW).

Air Products & Chemicals Inc. (NYSE: APD) traded at $79.50 with a market value of $16.8 billion. The consensus target price from Thomson Reuters is $98.75 and the 52-week trading range is $72.26 to $98.00. Air Products’ most recent yield was listed as 3.2%. The implied upside to the consensus target is 24% but we would note that the consensus target is still above the 52-week high.

The Boeing Company (NYSE: BA) traded at $71.05 with a market value of $53.2 billion. The consensus target price from Thomson Reuters is $86.08 and the 52-week trading range is $56.01 to $78.35. This DJIA component’s most recent yield was listed as about 2.5%. The implied upside to the consensus target is 21% but we would note that the consensus target is almost $8.00 higher than the 52-week high and you have to go back to before the recession to find Boeing shares that high.

Caterpillar Inc. (NYSE: CAT) traded at $91.25 with a market value of $59.5 billion. The consensus target price from Thomson Reuters is $130.95 and the 52-week trading range is $67.54 to $116.95. Caterpillar’s most recent yield was listed as 2.0%. The implied upside to the consensus target is 44% but we would note that the consensus target is almost 10% above the 52-week high.

Deere & Company (NYSE: DE) traded at $74.50 with a market value of $30 billion. The consensus target price from Thomson Reuters is $92.79 and the 52-week trading range is $59.92 to $89.70. Deere’s most recent yield was listed as 2.4%. The implied upside to the consensus target is about 25% but we would note that the consensus target is about $3.00 higher than the 52-week high.

The Dow Chemical Company (NYSE: DOW) traded at $30.00 with a market value of $35.9 billion. The consensus target price from Thomson Reuters is $37.23 and the 52-week trading range is $20.61 to $37.30. Dow’s most recent yield was listed as a very high 4.2%. The implied upside to the consensus target is 24% but we would note that the consensus effectively is the same as the 52-week high.

E. I. du Pont de Nemours and Company (NYSE: DD) traded at $48.40 with a market value of $45.3 billion. The consensus target price from Thomson Reuters is $58.33 and the 52-week trading range is $37.10 to $56.20. DuPont’s yield was listed as about 3.5%. The implied upside to the consensus target is 20% and that target is about $2.00 above the 52-week high.

Danaher Corp. (NYSE: DHR) traded at $51.85 with a market value of $35.9 billion. The consensus target price from Thomson Reuters is $60.95 and the 52-week trading range is $39.34 to $56.45. Danaher’s most recent yield was tiny at only 0.2%. The implied upside to the consensus target is only about 17% and it is worth noting that the analyst consensus target is more than $4.00 above the 52-week high.

Illinois Tool Works Inc. (NYSE: ITW) traded at $54.40 with a market value of $26 billion. The consensus target price from Thomson Reuters is $61.53 and the 52-week trading range is $39.12 to $59.27. ITW’s most recent yield was listed as 2.6%. The implied upside to the consensus target is only about 13%, making this the least ‘implied upside’ winner of the lot. This one is also only down about 8% from its most recent high as well.

You can see that there is a very mixed bag here. The Dow Chemical Company (NYSE: DOW) leads in the dividend department with a 4.2% yield. Caterpillar Inc. (NYSE: CAT) is the leader with ‘implied analyst upside’ of 44% but it seems a stretch in the upside if you look at where the stock has been and how volatile the stock has been. Illinois Tool Works Inc. (NYSE: ITW) has the least amount of ‘implied analyst upside’ but it has also held up among the best during the market sell-off.

Gold & Silver Miners With Most Upside & Value

Major Oil Companies WIth Most Upside & Value

Conglomerates With Most Upside & Value

JON C. OGG

Filed under: Dividend, Economy, Industry, Infrastructure, Value Investing Tagged: APD, BA, CAT, DD, DE, DHR, DOW, ITW

X-Rite Acquired by Danaher (XRIT, DHR)

Paul Ausick — Tue, 10 Apr 2012 12:44:59 +0000

Color technology provider X-Rite Inc. (NASDAQ: XRIT), owner of the widely used Pantone color system, has agreed to be acquired by conglomerate Danaher Corp. (NYSE: DHR) for $5.55/share in a deal worth about $625 million. The acquisition includes Danaher’s assumption of X-Rite’s debt net of cash. The acquisition is expected to close in the second quarter.

The all-cash tender offer is expected to begin within 5 days and represents a 39% premium over X-Rite’s closing price of $4/share last night. According to the announcement 68% of X-Rite’s voting shareholders intend to tender their shares in the offer.

Shares of X-Rite are up 38.5% at $5.54 in pre-market trading. The company’s 52-week range is $3.26-$5.03. Shares of Danaher are unchanged this morning at $54.59 in a 52-week range of $39.34-$56.45.

Filed under: Conglomerates, Mergers and Buy Outs Tagged: DHR, XRIT

Major Wave of Secondaries Hitting Market (DHR, VELT, BBEP, KMP, CPF, MHR, TCO, FVE)

Administrator — Wed, 15 Jun 2011 14:28:01 +0000

Secondaries, Secondaries, and more Secondaries!!! Companies must be nervous about the market and picking up capital when and where they can after a large move in the market. We are seeing many secondary offerings which have either priced or which are soon to price. Besides those there are many companies filing shelf registration statements that will allow capital raises in the near-future if and when they see fit.

Some of the companies in this are Danaher Corp. (NYSE: DHR), Velti Plc (NASDAQ: VELT), BreitBurn Energy Partners L.P. (NASDAQ: BBEP), Kinder Morgan Energy Partners LP (NYSE: KMP), Central Pacific Financial Corp. (NYSE: CPF), Magnum Hunter Resources Corp. (NYSE: MHR), and Taubman Centers Inc. (NYSE: TCO). Another pending deal which needs to be watched is coming from Five Star Quality Care Inc. (NYSE: FVE).

We have looked at the pricing and/or trading action on each, along with how the deal looks against a market capitalization and how the shares have traded. We have also added some color if it is applicable.

Danaher Corporation (NYSE: DHR) announced that it is selling 17.5 million shares of common stock at $51.75 per share. The closing price on Tuesday was $51.33 and the 52-week trading range is $35.19 to $56.09. Prior to the effects of this offering, Danaher has a market cap of $34.8 billion. The offering is expected to close on June 21, 2011. Citi, Morgan Stanley, Barclays, and UBS are acting as joint book-running managers for the offering. Baird, Jefferies, Banca IMI, Mitsubishi UFJ Securities and Wells Fargo are acting as co-managers.

Velti Plc (NASDAQ: VELT) has announced a secondary offering of 8 million shares at $15.25. The closing price on Tuesday was $15.78 and the 52-week trading range is $9.91 to 19.32. Before the effects of this offering, Velti has a market cap of $803 million. Jefferies & Company, Inc. is acting as sole book-running lead manager of the offering, with RBC Capital Markets, Needham & Company acting as lead managers and Canaccord Genuity Inc. and ThinkEquity LLC acting as co-managers.

BreitBurn Energy Partners L.P. (NASDAQ: BBEP) has announced the offering of announced today a registered underwritten public offering of 7 million partnership units at $19.78. The closing price on Tuesday was $20.60 and the 52-week trading range is $13.12 – 22.31. Before the effects of this offering, BreitBurn has a market cap of $1.2 billion. The lead underwriters for the offering are: Deutsche Bank Securities, BofA Merrill Lynch, Citi and Wells Fargo Securities.

Kinder Morgan Energy Partners LP (NYSE: KMP) just filed to sell ‘units’ on Monday has sold 17.5 million shares in a secondary offering at $ per share. The closing price on Tuesday was $71.12 and the 52-week trading range is $59.34 to $77.85. Before the effects of this offering, Kinder Morgan Energy Partners has a market cap of $22.7 billion. BofA Merrill Lynch, Barclays Capital, Credit Suisse, J.P. Morgan, and Wells Fargo Securities will act as joint book-running managers of the offering. More details are here on that full offering.

Filed under: Secondary Offering, Trading Alert Tagged: BBEP, CPF, DHR, FVE, KMP, MHR, TCO, VELT

Today’s Best Market Rumors (2/24/2011) Obama Mortgage, Danaher M&A

247wallst — Thu, 24 Feb 2011 13:41:29 +0000

Updated throughout the day.

Obama will propose a solution to charge against banks over mortgage foreclosure issues. It will involve the modification of the loan balances of $20 billion worth of mortgages (WSJ)

PerkinsElmer (NYSE: PKI) bid $.25 to low to successful buy Beckman Coulter (NYSE: BEC). The deal went to Danaher (NYSE: DHR) (Bloomberg)

Douglas A. McIntyre

Filed under: Rumors Tagged: BEC, DHR, PKI

Mergers As Far As The Eyes Can See (AOL, BEC, DHR, BRK-A, BRK-B, WSC, ESV, PDE, SNY, GENZ, GGOX, ENWV)

Administrator — Mon, 07 Feb 2011 13:49:17 +0000

They call it “Merger Monday” for a reason. Today’s news is not dominated by football hangovers. It is dominated by a slew of headlines over mergers, mergers, and more mergers. We compiled a brief summary of each deal this morning.

AOL Inc. (NYSE: AOL) is paying $315 million to acquire privately-held Huffington Post to revamp its online content.

Beckman Coulter Inc. (NYSE: BEC) is being acquired by Danaher Corp. (NYSE: DHR) for $5.87 billion. The deal comes to $83.50 per share and the $5.87 billion compares to a market cap of roughly $31.5 billion for Danaher. Danaher investors better hope that synergies and cost efficiencies can be had in a serious way because this was about $10.00 above what we thought was a fair market value in December when the rumors first broke.

Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) is finally making good on an event that first surfaced last August. Warren Buffett and friends are acquiring the rest of Wesco Financial Corporation (NYSE Amex: WSC), the remaining 19.9% not owned, for cash or shares of Berkshire Hathaway Class B common stock at the election of each shareholder for almost $550 million with a starting value before gains and items of $386.55 per share.

Ensco Plc (NYSE: ESV) is acquiring Pride International (NYSE: PDE) in a cash and stock deal valued at $41.60 prior to any dilution or share value change. The deal is for 0.4778 shares and $15.60 in cash.

Sanofi-Aventis (NYSE: SNY) is reportedly close to striking a deal to acquire Genzyme Corporation (NASDAQ: GENZ) for some $74 to $77 per share plus what will be up to a $5 to $6 earn-out right per share based upon certain milestones.

In a much smaller deal, GigOptix, Inc. (OTCBB: GGOX) is acquiring Endwave Corporation (NASDAQ: ENWV) in a stock for stock deal that appears to be close to a merger of equals. Endwave shareholders will own some 42.5% of the combined company.

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JON C. OGG

Filed under: Mergers and Buy Outs Tagged: AOL, BEC, BRK-A, BRK-B, DHR, ENWV, ESV, GENZ, GGOX, PDE, SNY, WSC

Top Analyst Upgrades & Downgrades (AKAM, DHR, FLEX, FTO, GE, GOOG, HES, RNWK, RVBD, ROC, SVU, SYNA, UNH, VLO, WYNN)

Administrator — Fri, 21 Jan 2011 13:23:18 +0000

These are some of this Friday’s top analyst calls with upgrades, downgrades, and initiations seen from Wall Street research firms.

Akamai Technologies Inc. (NASDAQ: AKAM) Started as Neutral at Collins Stewart.
Danaher Corp. (NYSE: DHR) Cut to Hold at S&P Equity Research (late-Thursday call).
Flextronics International (NASDAQ: FLEX) Reiterated Outperform and raised target to $10 at Credit Suisse.
Frontier Oil Corp. (NYSE: FTO) Cut to Neutral at BofA/ML.
General Electric Co. (NYSE: GE) Reiterated Neutral and $21 target BofA/ML; Positive comments from Goldman Sachs.
Google Inc. (NASDAQ: GOOG) Raised target to $800 at Jefferies; Reiterated Outperform and raised target to $750 at Credit Suisse; Reiterated Buy and raised target to $750 at BofA/ML.
Hess Corporation (NYSE: HES) Cut to Neutral at BofA/ML.
RealNetworks Inc. (NASDAQ: RNWK) Raised to Hold at S&P Equity Research (late-Thursday call).
Riverbed Technology, Inc. (NASDAQ: RVBD) Started as Overweight at JPMorgan.
Rockwell Collins. Inc. (NYSE: ROC) Raised to Outperform and $85 target at Credit Suisse.
SUPERVALU Inc. (NYSE: SVU) listed as Bear of the Day and maintained Underperform at Zacks Equity Research.
Synaptics Inc. (NASDAQ: SYNA) Cut to Neutral at JPMorgan; Cut to Underperform at Needham.
UnitedHealth Group (NYSE: UNH) Reiterated Outperform and raised target to $50 at Credit Suisse.
Valero Energy Corporation (NYSE: VLO) Cut to Neutral at BofA/ML.
Wynn Resorts Ltd. (NASDAQ: WYNN) Raised to Outperform and listed as Bull of the Day at Zacks Equity Research.

JON C. OGG

Filed under: Analyst Calls Tagged: AKAM, DHR, FLEX, FTO, GE, GOOG, HES, RNWK, ROC, RVBD, SVU, SYNA, UNH, VLO, WYNN

Are More Big Spin-Offs and Break-Ups Imminent? (ITT, MRO, FO, GE, MMM, UTX, HON, DHR, DOV, TXT, OTTR, BRK-B)

Administrator — Thu, 13 Jan 2011 15:55:45 +0000

The reaction to the news of a conglomerate break-up in a three-way separation was incredible for ITT Corporation (NYSE: ITT) yesterday. Shares closed up 16.5% rather than over 20% and the closing price was $61.50. We thought that maybe all of the good news was being priced in even having received the analyst notes from Gabelli & Co. with a “buy” rating and an $89.00 target (with new $90 value this morning).

Now we have a break-up into two happening from Marathon Oil Corporation (NYSE: MRO). Marathon is far from a conglomerate, but its split into two for its exploration activities and its refining activities follows the same path as ITT. Fortune Brands Inc. (NYSE: FO) gained 15% after its late-2010 break-up announcement. We can’t help but wonder if other conglomerates and quasi-conglomerates might consider similar strategies. That leads to reviews of General Electric Co. (NYSE: GE), United Technologies Corp. (NYSE: UTX), 3M Co. (NYSE: MMM), Honeywell International Inc. (NYSE: HON), Danaher Corp. (NYSE: DHR), Dover Corp. (NYSE: DOV), Textron Inc. (NYSE: TXT), and even a small company called Otter Tail Corporation (NASDAQ: OTTR). Lastly, what about Berkshire Hathaway Inc. (NYSE: BRK-B)?

Filed under: Activist Investor, Banking, Brokerage Firms, Buffett, business and finance, Business Services, Conglomerates, Consumer Goods, Corporate Governance, Editor's Picks, Financial Stocks, IPOs, Large Cap Stocks, Mergers and Buy Outs, Private Equity, Shareholder Issues, Value Investing Tagged: BRK-B, DHR, DOV, FO, GE, HON, ITT, MMM, MRO, OTTR, TXT, UTX

The Fallacy of Buffett Takeover Lists (BRK-A, SYY, VFC, DHR, BNI, WFC, COP)

247wallst — Fri, 20 Mar 2009 14:09:56 +0000

It seems that there is renewed interest in a Warren Buffett and Berkshire Hathaway Inc. (NYSE: BRK-A) acquisition strategy for another large takeover. This has always been on the table, and as we noted in the most recent annual report, Buffett has mentioned an interest. He even laid out a set of criteria. But the new list of companies that is being passed around as a potential target list actually is based upon the current numbers rather than on many of these actually being legitimate targets.

Buffett has stressed that the larger the company, the greater the interest, and as always he looks for businesses that have a longevity projection of “forever” in his search. His criteria was laid out as companies with at least $75 million of pre-tax earnings unless the business will fit into existing units, consistent earnings history rather than turnarounds or promises ahead, and strong returns on equity with little or no debt. Buffett also said he wants simple businesses that are easy to understand and that has a management team already in place.

Where this is most interesting is that Buffett has already stated that an offering price needs to be in place. He even noted, “We don’t want to waste our time or that of the seller by talking, even preliminarily, about a transaction when price is unknown.” Buffett said outright that he will not engage in unfriendly takeovers and won’t participate in business auctions. His preferred target is the $5 to $20 billion range.

But here is where there is a stretch between what is going around right now and what Buffett himself has said: “We are not interested, however, in receiving suggestions about purchases we might make in the general stock market.” It seems that the mere act of pointing names out could in fact make Mr. Buffett turn the other way.

Bloomberg yesterday ran a list of 46 companies which fit into the criteria. What is odd about this list is that it seems that the screen criteria only ran numbers that fit into what Buffett said. But many of these names are going to be too cyclical or too dependent upon too many factors for Buffett to want to buy them. More importantly, a lot of these companies have been beaten up too much for management to want to sell.

The three big names that were used as points of reference were food supplier Sysco Corp. (NYSE: SYY), clothing maker VF Corp. (NYSE VFC), and medical and consumer tool maker Danaher Corp. (NYSE: DHR). While Danaher’s policy is unknown to us, our own screening in the past has put Sysco as a company that would not want to be acquired or one that would require too large of a premium for Mr. Buffett to consider upon higher prices. Our own screening in the past also put VF Corp. as a company that only wants to be an acquirer of brands rather than prey.

There is one company which Buffett has in his current portfolio where Buffett could make a play, and that is Burlington Northern Santa Fe (NYSE: BNI). Its market cap is $19 billion now that it has fallen by more than half, and Berkshire already holds more than 20% of the stock. The question boils down to whether or not management would sell at depressed levels. Buffett might just want to take a larger stake here.

Wells Fargo & Co. (NYSE: WFC) is not one that Buffett would acquire. Even after the drop, it is far too large. But he is a huge holder, even in his personal account, and the recent woes took the company down so far that Buffett may have snapped up more shares. We discussed this with some traders last week as being a possibility, but there has not been any word on this notion yet. Even with the shares down so much, his stake that we already knew about in Q4 is currently worth over $4 billion.

Some target companies were in the oil patch and a large steel company was in there. Buffett already got his fingers pinched when he tried to gobble up a lot of Conoco Phillips (NYSE: COP), and that position looked slightly lower than before. Either way, the recent swings in metals and commodities probably makes Buffett want to steer clear. He might believe in the “forever” model in those, but if forever comes with too much pain or too many headaches he is likely to stay away. Conoco was one of our own energy stocks which we think can double, and that assumes no Buffett actions.

One thing to remember about Buffett is that he doesn’t like being predictable. His appetite is there for a deal, that is obvious. Ultimately, any of these companies could still fit the bill for Buffett. It just has to be friendly and we think it has to not be something that has burned him lately. If it was as easy as having historically low P/E’s right now, Buffett would be out of cash many times over because of all the possibilities. But whatever business he chooses as that old former phrase of “a whale of a deal” is going to have to be an absolute slam dunk.

As always, here is the full list of Buffett & Berkshire holdings.

JON C. OGG
March 20, 2009

Posted in Buffett, Conglomerates, Mergers and Buy Outs Tagged: BNI, BRK-A, COP, DHR, SYY, VFC, WFC

Top Analyst Upgrades (AAP, AZO, ED, CRH, DHR, LLY, INTC, LEAP, ORLY, SEIC)

247wallst — Wed, 18 Mar 2009 12:47:35 +0000

These are te upgrades and positive research calls that we have seen from Wall Street this Wednesday morning:

Advance Auto Parts (AAP) Started as Outperform at Baird.
AutoZone (AZO) Started as Outperform at Baird.
Con Edison (ED) Raised to Buy at Jefferies.
CRH plc (CRH) Raised to Buy at Goldman Sachs.
Danaher (DHR) Raised to Outperform at William Blair.
Eli Lilly (LLY) Raised to Buy at Citigroup.
Intel (INTC) Raised to Buy at Needham.
Leap Wireless (LEAP) Raised to Overweight at Thomas Weisel.
O’Reilly Automotive (ORLY) Started as Outperform at Baird.
SEI Investments (SEIC) Raised to Outperform at KBW.

JON C. OGG

Posted in Analyst Calls Tagged: AAP, AZO, CRH, DHR, ED, INTC, LEAP, LLY, ORLY, SEIC

Top Pre-Market Analyst Downgrades (DHR, LEH, QSII, SONC, SPWR)

247wallst — Fri, 12 Sep 2008 06:26:06 +0000

There are surprisingly few analyst calls today, but these are some of the top calls we have seen as downgrades with more than two hours to the market open:

Danaher (DHR) Cut to Hold at Deutsche Bank.
Lehman Brothers (LEH) has been dropped from coverage by Morgan Stanley.
Quality Systems (QSII) Cut to Neutral at Piper Jaffray.
Sonic (SONC) Started as Neutral at Goldman Sachs.
Sunpower (SPWR) Started as Sell at Societe Generale.

Jon C. Ogg
September 12, 2008