Jefferies Reiterates Buy Rating on 3M (MMM)
Jefferies & Company is out with a research report this morning, where it reiterates its Buy rating on 3M (NYSE: MMM); it has a $110 price target on the stock.
The Jefferies analysts cited the company’s recent announcement that it would purchase Cogent Inc. (NASDAQ: COGT) for $10.50 per share, which values Cogent at roughly 6.7x consensus 2011 EBITDA (after synergies) and 2.6x 2011 sales. The transaction is expected to close in Q4 and should be $0.01-$0.02 accretive in its first year.
The analysts noted that, as of December 31, 2009, COGT’s total backlog stood at $210.7m, including $60.4m in estimated contract awards, with roughly $127.2m expected to not be filled this year. YTD sales of $49.8m remain $33.7m behind the company's estimated $83.5m backlog for 2010 (vs. $135m consensus sales).
As for valuation, the analysts remarked, “3M trades near cycle lows (12.7x 2011E EPS). Our $110 price target is based on a 50/50 blend of peak and mid-cycle valuation models and implies 17.6x 2011E EPS.”
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