UPDATE: Credit Suisse Initiates Coverage on Regal-Beloit Corporation with Neutral Rating, $87 PT on Strong Management, Competitive Market

In a report published Wednesday, Credit Suisse analyst Julian Mitchell initiated coverage on Regal-Beloit Corporation

with a Neutral rating and $87.00 price target. In the report, Mitchell noted, “We think that management has a very strong track record on M&A, but recent share price performance / valuation make it challenging for us to initiate at OP. U.S. Residential construction constitutes 38% of RBC sales and has been a major driver of the stock. We think the share price embeds further upgrades to consensus EPS forecasts. We are concerned that RBC's market share in motors (75% of sales) is under pressure (1) at the low-end from emerging, focused competitors (Nidec, Teco, WEG); and (2) at the high-end from large global electrical equipment companies that are able to offer Solutions and Services as a result of having a much broader product range (ABB, Siemens). This likely implies that RBC's incremental margins will remain muted, limiting the earnings upside from any top-line rebound.” Regal-Beloit Corporation closed on Tuesday at $81.81.