Market Overview

Deutsche Bank On Wabtec: 'Get Aboard This Train'

Deutsche Bank On Wabtec: 'Get Aboard This Train'

Westinghouse Air Brake Technologies Corp (NYSE: 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

Latest Ratings for WAB

Sep 2019UpgradesSector WeightOverweight
Sep 2019Initiates Coverage OnEqual-Weight
Aug 2019UpgradesNeutralBuy

View More Analyst Ratings for WAB
View the Latest Analyst Ratings

Posted-In: Deutsche Bank Freight rail rail stocksAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga


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