Trends for CLC Improving: BB&T Capital Markets

Analysts at BB&T Capital Markets downgraded CLARCOR Inc (NYSE: CLC) from “hold” to “buy,” while raising their estimates for the company. The 12-month target price for CLC is set to $40.

According to BB&T Capital Markets, CLC has a high aftermarket mix, which offers the company with defensive characteristics and leverage to a recovery in the early cycle. CLC’s competitor Donaldson (NYSE: DCI) has posted impressive results for Q3 and raised its guidance for FY10. BB&T Capital Markets said that DCI’s results were driven by rising aftermarket sales, stabilizing utilization rates for heavy- and medium-duty trucks, improving construction end markets and inventory restocking, all of which will also benefit CLC.

BB&T Capital Markets believes that CLARCOR’s trends are improving and the consensus estimates are conservative. CLC has missed the recent round of rally in the share market, with the company’s share price appreciating by just 36% from its March lows, as compared to a 90% rise in Donaldson’s shares and 87% in the S&P Industrials.

BB&T Capital Markets raised its EPS estimates for FY’10 and FY’11 by $0.05 and $0.14, respectively, on higher forecasts for revenues and margins.