Global Hunter Upgrades Alamo Group

Global Hunter Securities upgraded Alamo Group, Inc. ALG from Neutral to Buy Tuesday and raised its price target from $50 to $55.

Analyst Michael Shlisky made the upgrade following his recent visit to Alamo’s headquarters.

“Following the recent sale of 1.7MM shares by ALG's largest shareholder, the stock declined nearly 10 percent despite the fact that current shareholders were not diluted and ALG raised no cash,” according to Shlisky.

The analyst report noted that “After speaking with the heads of NA Ag and NA Industrial, we got the sense that the snow removal business has margin tailwinds, as this business is running at full production; in addition, ALG has opportunities to generate significant parts and service business.

“In NA Ag, we got the sense that management was fairly confident that its business can outperform the large OEMs, given its focus on <100HP and livestock markets.

“ALG's valuation has fallen behind larger OEMs in the aftermath of the offering, which presents an opportunity given our outlook for ALG (at the high end of peers).”

Shlisky concluded that :despite the offering, ALG's shares are likely to remain less liquid than peers. We believe ALG should therefore trade at a multiple in line with peers; our new $55 price target represents ~13x our 2015 EPS estimate (from $50, or ~12x our 2015 EPS estimate).”

Alamo Group, Inc. recently traded at $45.62, up 1.56 percent.