In a report published Wednesday, Morgan Stanley analyst Thomas Robb upgraded Manitowoc Company (NYSE
:Â MTWÂ [FREE Stock Trend Analysis]) to Overweight from Equal-weight, raising its price target to $30.00 from $23.00.
According to the report, given a more bullish view on Non-Resi Construction and positive result from out AlphaWise crane rental survey give conviction that they are on the cusp of a crane recovery. Potential is seen for an 8 percent upward revision to 2015 cons. EPS.
“When we launched coverage of MTW in Sept, the sole reason behind our EW recommendation was our skepticism around the timing of a Non-Resi recovery,†the report said. “However, over the past two months, we have become increasingly bullish on the end market outlook, on the back of improving leading indicators (Dodge, ABI) and growing Resi active community count (now happening for the first time this cycle). As such, we project 5% US Non-Resi investment growth, which should translate to 10%+ growth in Crane sales by 2015e.â€
Some highlights from the report include:
-â€ConExpo has been a positive catalyst for order activity in past years, resulting in 34% and 16% Q/Q order growth in 2005 and 2008, respectively. We expect a similar result in 1Q14.†-â€Valuation does not look stretched; MTW trades at 16.4x NTM P/E, a mere 6% premium to peers vs. a 25% average premium during the last recovery.â€
Risks to MTW include more aggressive Chinese competition, lack of substantial US Non-Resi Construction recovery and falling crane rental utilization.
MTW closed Tuesday at $22.94 with shares trading up at 0.66 percent.
