Morgan Stanley’s Robert Wertheimer moved his rating on Bucyrus shares to outperform from not-rated. The company’s recent $1.3 billion acquisition of Terex’s(TEX Quote) mining machinery unit, to which investors had responded favorably, “has been underappreciated by the market, even given the 15% rise in the stock,” Wertheimer wrote in a note to clients.
Wertheimer, who set a $71 price target on Bucyrus stock, said he’d made a “detailed” country-by-country, mine-by-mine analysis of Bucyrus’ and Terex’s mining businesses, hunting for redundancies and overlap. The research suggested that the deal could add 25% to 40% to Bucyrus’ earnings by 2011. Synergies, he added, could reach $100 million to $200 million more than the company’s own forecast.
About 60% of the mines using Bucyrus equipment don’t use Terex, Wertheimer said. Conversely, 70% of mines with Terex machinery don’t use anything from Bucyrus. The analyst said the most lucrative opportunities for Bucyrus lie in hydraulic excavators and draglines.
Meanwhile, at Barclays, analyst Andy Kaplowitz lifted his price target on Bucyrus shares to $73 from $64 and his 2010 per-share earnings target to $3.55 from $2.90.
In late afternoon trading Monday, shares of the South Milwaukee, Wisc., company were trading at $62.25, up $5.88, or 10.4%. Earlier in the session, the stock set a new 52-week high: $62.42. Volume reached 3.8 million shares, compared with daily average turnover of 2.8 million.
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