In a report published Monday, J.P. Morgan analyst C. Stephen Tusa Jr. initiated coverage on Pentair PNR with an Overweight rating and $75.00 price target.
In the report, J.P. Morgan noted, “We initiate coverage of PNR at Overweight with a $75 Dec-14 price target and view this as our top through-the-cycle call. With an attractive combination of an upside cyclical slant along with significant operational improvement potential in a sizeable part of the business, the multi-year story at Pentair stands out with potential upside inflection after two decades of solid, but average, financial results. While 400 bps of margin improvement seems like a stretch, we see plenty of reasons to believe. We view $5 as the level of 2015E EPS on which the stock is attractive, with a group-best PEG/PEOG of 0.5x/3.5x. However, through balance sheet and extra productivity, we see potential upside/hedge that either makes something close to $5 more realistic during a downturn or suggests $6 is achievable and will drive multiple expansion. Beyond '15, if the company executes, we see a mid-cap to big-cap story and the potential for Pentair to emerge with >$11 B in revenues and a premium multiple.”
Pentair closed on Friday at $62.53.
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