UPDATE: Citigroup Raises PT on Illinois Tool Works as Planned Sale of Industrial Packaging Business Begins
In a report published Wednesday, Citigroup analyst Deane M. Dray reiterated a Neutral rating on Illinois Tool Works (NYSE: ITW), and raised the price target from $75.00 to $80.00.
In the report, Citigroup noted, “Following its disclosure in February 2013 that it was reviewing strategic alternatives for its $2.4 bil Industrial Packaging business, ITW officially announced on Sept-24 that the sale process has begun. In an incremental positive, the company declared that all the dilution from the divestiture would be offset by buybacks and that additional balance sheet leverage will be used to fund the program. Clearly, this is not old-school ITW. Guidance was trimmed for the move to disco ops and an unrelated 9c tax charge expected for 3Q, but the underlying forecasts for 3Q and 2013 are unchanged. The up-sized buyback is expected to total 50 million shares (11% of shares outstanding). Reflecting the immediate reclassification to discontinued operations and the lagged benefit of buybacks, we are trimming our 2013/2014 EPS estimates by 63c/15c.”
Illinois Tool Works closed on Tuesday at $78.00.
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