Avondale Still Believes Joy Global Will Outperform Machinery Peers

Avondale Partners’ Igor Maryasis believes at its current levels, Joy Global Inc. JOY's stock valuation already reflects the signs of stabilization in the bookings at the Services business that began to emerge in late 2015.

Maryasis maintained a Market Outperform rating on the company, with a $25 price target. The analyst, however, removed Joy Global from Avondale’s Conviction List.

Machinery Outperformance Likely

Given that there are signs of the initial stages of a potential cyclical bottoming of the mining equipment market, Maryasis believes the company would continue to outperform its machinery peers.

This outperformance was likely “once the sector shifts from present arguably tentative stabilization in refurbishment, upgrades and repair of existing mining fleets into a more sustainable recovery mode,” the analyst mentioned.

Maryasis believes there could be additional meaningful longer-term upside potential for the company, driven by an eventual recovery in mining, as well as the ongoing internal restructuring efforts and Joy Global’s unique growth strategies.

The analyst stated that these factors together could lead to an estimated $3 in incremental EPS over the next five years.