UPDATE: KeyBanc Upgrades Gardner Denver to Buy on Compelling Valuation

KeyBanc upgraded Gardner Denver

from Hold to Buy and announced a $78.00 price target. KeyBanc commented, "We are upgrading GDI based on … 1) a compelling valuation following a period of share underperformance (trading at 7.2x 2013 EV/EBITDA vs. its peer group at 9.8x EV/EBITDA); 2) a pristine balance sheet supportive of a sizable share repurchase (2013 free cash plus one turn of EBITDA supports a buyback of approximately 20% of GDI's outstanding shares = $0.85+ of earnings power); 3) our conviction that petroleum pump demand will bottom in 2013 and begin to recover in 2014-2015 (investor sentiment and rig count to improve ahead of demand fundamentals); and 4) our view that GDI's European restructuring is on track to accrue savings of $35 million-$40 million by 2016, supporting mid- to high-teen operating margins for the Industrial Products Group over time." Gardner Denver closed at $66.58 on Wednesday.