UPDATE: Citigroup Reiterates Neutral Rating, Raises PT on Federal Signal Corporation Following 2Q13 Report

In a report published Monday, Citigroup analyst Matthew W. McConnell reiterated a Neutral rating on

, and raised the price target from $9.00 to $11.00. In the report, Citigroup noted, “Federal Signal's 2Q13 operating performance had ample evidence of the successful transformation that continues to gain steam: Upside revenue as new capacity comes online, a healthy margin beat, solid free cash flow, and a 10c boost to 2013 guidance. The shares were appropriately rewarded with a 9% increase on Aug-9. There is increasing evidence that critical municipal markets (roughly 60% of sales) have bottomed, and Europe (roughly 30%) appears to have stopped declining. We remain impressed with the execution on the turnaround. We reiterate our Neutral rated given our view that 2Q results included the benefit of backlog burn, implying that the recent performance is unlikely sustainable barring a meaningful uptick in orders. An increase in GAAP tax next year also presents the risk of little to no 2014 EPS growth, even if margin execution remains solid. We are increasing our 2013 EPS estimates for the 2Q beat, and increasing our target from $9 to $11, but remain Neutral rated.” Federal Signal Corporation closed on Friday at $10.41.