Deutsche Bank On Wabtec: 'Get Aboard This Train'

Westinghouse Air Brake Technologies Corp WAB (also known as Wabtec) a supplier of value-added products and services for rail markets, could achieve its earnings guidance over the coming years that supports a bullish stance on the stock, according to Deutsche Bank.

The Analyst

Deutsche Bank's Saree Boroditsky upgraded Wabtec from Hold to Buy with a price target lifted from $95 to $105.

The Thesis

Wabtec's management presented a five-year strategic plan at its investor day in which earnings per share could double from $3.80 in 2018 to more than $7.60 per share by 2022, Boroditsky said in a note. Moreover, operating profit could reach $1 billion and top-line growth of 9 percent could also be seen.

Investor sentiment on the stock remains "relatively negative" with a high short interest, the analyst said. However, the Street is underappreciating Wabtec's earnings power potential and ability to achieve its guidance for three reasons:

  • Better-than-expected freight volumes over the coming years;
  • A recovery in Freight and margin improvement in Transit; and
  • Potential for incremental upside if the reported transformational deal with GE Transportation becomes a reality.

The analyst's revised price target of $105 is based on an approximate 2x multiple on expected 2019 earnings per share of $4.67. Boroditsky said investors are encouraged to "get aboard this train."

Price Action

Shares of Wabtec hit a new 52-week high of $95.53 Monday morning.

Related Links:

Analyst: Wabtech A Buy On Potential GE Synergies

Stifel: Buy 'Cal Ripken-Like' Wabtec

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm
Posted In: Analyst ColorUpgradesPrice TargetAnalyst RatingsDeutsche BankFreightrailrail stocksrailwaySaree Boroditsky
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!