UPDATE: Wunderlich Securities Downgrades Applied Industrial Technologies to Hold, Raises PT on Valuation

In a report published Friday, Wunderlich Securities analyst Brent D. Rakers downgraded the rating on Applied Industrial Technologies (NYSE: AIT) from Buy to Hold, but raised the price target from $51.00 to $56.00.In the report, Wunderlich Securities noted, “We are reducing our rating on Applied (AIT), with a price target updated to $56. Applied trades at a valuation in line with distributor peers that have historically commanded a 15%-20% premium to AIT. While successful implementation of product/sales force expansion could drive valuation gains, these efforts have been reduced in favor of cost controls/execution amid a tough demand picture. We enter Applied's upcoming EPS with significant uncertainty toward its 2014 outlook, given the magnitude of 2013 sales underperformance versus guidance and the likelihood of challenging operating cost comparisons. While yesterday's favorable ISM readings support a stronger outlook, we prefer greater company-specific clarity and desire a more attractive relative valuation.”Applied Industrial Technologies closed on Thursday at $53.52.