Market Overview

KeyBanc Moves To The Sidelines After Altra Industrial Motion's Recent Rally

KeyBanc Moves To The Sidelines After Altra Industrial Motion's Recent Rally

Altra Industrial Motion Corp (NASDAQ: AIMC) faces incremental risks in a few important markets, which weighs on its 2020 outlook, according to KeyBanc Capital Markets.

The Analyst

KeyBanc’s Jeffrey Hammond downgraded on Altra Industrial Motion from Overweight to Sector Weight.

The Thesis

The Class 8 Truck and Industrial-Germany markets could contract by around 15% in 2020, impacting approximately $400 million of Altra Industrial Motion’s revenue, Hammond said in the downgrade note.

He added that both these markets contribute about 20% of the company’s total sales.

The loss in revenue in 2020 could translate to an estimated EBITDA drag of $20 million, more than offsetting the expected synergies from the merger of Fortive Corp’s (NYSE: FTV) Automation and Specialty platform, Hammond said.

He reduced the EPS estimates for 2019 and 2020 from $2.90 to $2.85 and from $3.20 to $2.75, respectively.

The analyst further mentioned that the stock could re-rate in the long term, and that the company “has yet to fully flex its cash generating muscle.” However, he recommended investors to wait for a better entry point.

Price Action

Shares of Altra Industrial Motion had declined 7.23% to $26.44 at the time of publishing Tuesday.

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Latest Ratings for AIMC

Sep 2019MaintainsBuy
Sep 2019DowngradesOverweightSector Weight
Jul 2019MaintainsOverweight

View More Analyst Ratings for AIMC
View the Latest Analyst Ratings

Posted-In: Jeffrey Hammond KeyBanc Capital MarketsAnalyst Color Downgrades Analyst Ratings


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