UPDATE: Goldman Sachs Reiterates Neutral Rating, Lowers PT on Federal-Mogul Corporation
In a report published Monday, Goldman Sachs Group reiterated its Neutral rating on Federal-Mogul Corporation (NASDAQ: FDML), but lowered its price target from $12.00 to $10.50.
Goldman Sachs noted, “We expect the weak demand environment will continue to weigh on results in the near term including the adverse mix shift away from diesel and heavy duty engines. That said, we believe that decremental margins will improve in 4Q (vs. 3Q) as the company will have sufficient time to flex down its temp workforce and take advantage of short week programs with the bulk of Q4 production cuts expected in December. This is in sharp contrast to Q3 where September production cuts were given with little notice. Mr. Broderick, the CEO of the Vehicle Solutions Group mentioned that they are planning to shift the focus back to the premium category. We believe this strategy could imply an uptick in SG&A expense as they try to re-establish the importance of the brand to the professional installer base.”
Federal-Mogul Corporation closed on Friday at $8.40.
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