Skip to main content

Market Overview

Komatsu Has No Competition In Bid To Buy Joy Global, Baird Goes Neutral

Share:
Komatsu Has No Competition In Bid To Buy Joy Global, Baird Goes Neutral

A day after Joy Global Inc. (NYSE: JOY) reported lower-than-expected results, Baird Equity Research downgraded the shares to a Neutral rating. Analysts Mircea Dobre and Joseph Grabowski cited that there is no competition to bid the company following Komatsu's offer to buy it.

However, the brokerage lifted the price target from $26 to $28. Baird pointed out that the latest quarterly results indicated depressed CAPEX among the global mining firms. The lead analyst pointed out that the management expects another 10 percent drop in CAPEX next year.

Related Link: Disappointing Q3 Earnings From Joy Global

In a research note to clients, the brokerage said, "There have been no reports of competing offers in the subsequent six weeks and we believe Komatsu is a logical acquirer of Joy, particularly considering Komatsu's strong, credible financial position. Thus we are adjusting our rating to Neutral and price target to $28. - At ~1.5x FY16 EV/Sales, the offer is in line with JOY's long-term average valuation and in our view a good long term deal for Komatsu given both the value of JOY's assets, brand and global reach as well as position in the mining cycle."

The analysts welcomed the management's move to align with a bigger partner that has a solid financials and the valuation price is attractive for Komatsu.

The brokerage would have liked Joy Global to reiterate its earlier EPS outlook for the fiscal year 2016 rather than withdraw it. Similarly, it wished for a modest reduction in revenue guidance.

The stock traded flat at $27.25 on Friday.

Full ratings data available on Benzinga Pro.

Do you have ideas for articles/interviews you'd like to see more of on Benzinga? Please email feedback@benzinga.com with your best article ideas. One person will be randomly selected to win a $20 Amazon gift card!

Latest Ratings for JOY

DateFirmActionFromTo
Nov 2020StifelUpgradesHoldSpeculative Buy
Nov 2020StifelUpgradesReduceHold
Oct 2016CL KingDowngradesBuyNeutral

View More Analyst Ratings for JOY
View the Latest Analyst Ratings

 

Related Articles (JOY)

View Comments and Join the Discussion!

Posted-In: Baird Equity ResearchAnalyst Color M&A Downgrades Price Target Commodities Markets Analyst Ratings

Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com