UPDATE: Bank Of America Upgrades Joy Global, Optimistic On LA And 'Tight' Natural Gas Market

In a report published Friday, Bank of America analyst Ross Gilardi upgraded Joy Global JOY from Neutral to Buy and raised the price target from $60.00 to $70.00. Joy Global reported a seven percent second quarter EPS beat and reiterated FY14 guidance, “despite a brutal coal operating environment.” Gilardi commented, “Joy's aftermarket business (70% of sales) is putting a floor under earnings, and aftermarket orders were up 10% for the second quarter in a row.” Bank of America sees a potential upside to its $70.00 price objective as investors become confident in the earnings bottom. The analyst added that improvement in Latin American copper markets aided the increase in aftermarket orders. The company's aftermarket book to bill is 1.1x, which Gilardi suggests “that miners may be having a more difficult time sustaining maintenance deferrals.” The backlog is currently stable at $1.5 to $1.6 billion for the fourth consecutive quarter. Bank of America concluded that a tighter natural gas market following the “harsh” winter could aid in the promotion of thermal coal production activity in the US PRB. Shares of Joy closed at $57.85 on Thursday and are currently up 1.3 percent in pre-market trading.