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Longbow Research Still Buying Ecolab

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  • Ecolab Inc. (NYSE: ECL) reported in-line third-quarter financial results on Monday morning.
  • Management lowered its guidance on FX and energy headwinds.
  • Longbow Research analyst Dmitry Silversteyn reiterated a Buy rating and $135.00 price target on the stock, which was up more than 3.5 percent on Tuesday.

Ecolab reported third-quarter earnings of $1.28 per share, just a penny below consensus. Following the earnings call, Longbow Research analyst Dmitry Silversteyn noted that, "Extreme currency headwinds stemming from Venezuela, specifically regarding the stated vs. actual exchange rates, are believed to continue in 4Q15 and beyond." Moreover, he pointed out that EPS guidance for fiscal 2015 was trimmed to $4.35-$4.45 (from $4.45-$4.60) on the back of persistent FX headwinds.

Read-Throughs

The research firm shared to read-throughs of the results. Silversteyn noted that "increasing sentiment regarding further delays until the return of oil and gas growth may be a further headwind for those companies with broad exposure to the market."

In addition, falling industrial production within APAC regions provides further signals of deteriorating economic conditions within the region. These may eventually become a headwind for PolyOne Corporation (NYSE: POL), A Schulman Inc (NASDAQ: SHLM) and The Valspar Corp (NYSE: VAL).

Investment Thesis

The report went into Longbow’s investment thesis.

Silversteyn likes "Continued organic growth in all core segments excluding Global Energy displays ECL's ability to grow in challenged environments. Given easier comps and anticipated accretion from acquisitions, 2H16 and beyond appear promising."

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.

Latest Ratings for ECL

DateFirmActionFromTo
Apr 2018NomuraMaintainsNeutralNeutral
Mar 2018BMO CapitalInitiates Coverage OnMarket Perform
Feb 2018CitigroupMaintainsNeutralNeutral

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Posted-In: Dmitry Silversteyn Longbow Longbow ResearchAnalyst Color Emerging Markets Reiteration Markets Analyst Ratings

 

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