UPDATE: Morgan Stanley Initiates Coverage on Parker-Hannifin with Negative Outlook
In a report published Thursday, Morgan Stanley analyst Nicole DeBlase initiated coverage on Parker-Hannifin Corporation (NYSE: PH) with an Underweight rating and $92.00 price target.
In the report, Morgan Stanley noted, “Parker is the purest play on global IP growth to be found in the Machinery group, which implies organic growth acceleration in FY14 and beyond. However, we believe that the bulls are looking for a stronger pickup in core growth in FY14, precipitated by Machinery OEM/ dealer inventory restocking. This could happen, but if so, is more likely to be a FY15 event given the timing of PH's fiscal year end. As such, we believe that the company's guidance is just right, and position ourselves slightly below the midpoint. We see little scope for a beat-and-raise quarter in the near term. The stock trades at a rich 27% premium to our Machinery group, well above its 6% cross-cycle premium. The stock seems priced for continued outperformance, yet we believe probability of the Bull Case playing out is low.”
Parker-Hannifin Corporation closed on Wednesday at $102.10.
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