Our EquityAnalytics department is always updating price targets and ratings on companies that we cover based on new information. Our price targets and ratings are thoroughly researched and use financial analysis tools to determine stock prices. Today, we are updating the following companies from our coverage: AmBev (ABV), Eastman Chemical (EMN), FMC (FMC), LDK Solar (LDK), and M/I Homes (MHO).
The chart below shows new ratings, price targets, and buy/sell ranges vs. old ones:
AmBev: Upgrade from Sell to Hold, Increase PT From $33 to $42
AmBev got a large upgrade in price target after their latest earnings, as the company is looking much healthier from last quarter. One reason for a large upgrade in our price target was that the company's earnings and revenue came in much better than expected. Additionally, the tax rate came in much lower than expected. Margins are definitely still under pressure, and the company is pretty fairly valued at this point with a 20 forward PE. We expect margin pressure to ease this year, and we believe that capital expenditures will decline a bit.
Eastman Chemical: Maintain at Hold, Maintain PT at $52
No major changes were done after the latest report. Earnings came in as expected, and the situation here looks pretty similar. We would buy on a decline, but shares are pretty fair valued as is.
FMC: Maintain at Hold, Increase PT from $98 to $109
FMC is one of the best growth stocks in the chemical industry. The company continues to outshine many in its sector despite tough market conditions, and we believe the growth story is not done. We raised our expectations again for 2012, as the company guided better in their latest quarter. At the same time, however, the company does look to have a lot of this growth already priced into the stock, and we do not see a ton of upside from this area. We would buy on dips. Additionally, we are concerned about margins shrinking slightly for the rest of the year. If those come in lower than expected, our price target may be a bit high.
LDK Solar: Downgrade from Hold to Sell, Decrease PT from $4 to $2
The solar industry is a mess, and LDK Solar is one of the companies suffering from that mess. The company's severe write-off in their latest quarter was definitely a negative for the stock, and even without it, earnings came in well under our expectations. At this point, we see basically no value at all in the stock. The company has very little visibility for upward catalysts, and they are looking quite rough in terms of cash, cash flow, and outstanding debt. We are concerned for the company's ability to turn a profit until 2014. With that said, they may be looking at a buyout or possible bankruptcy.
M/I Homes: Maintain at Buy, Increase PT from $18 to $24
The housing industry is definitely looking much stronger right now than last year. One company that we continue to like is M/I Homes. We upped our price target for the company as the company reported results better than expected in their latest quarter. The company saw new orders come in at 17%, and they are looking optimistically at the future. Based in the Midwest, they are in a market that also will recover faster than the Southwest, West, or Southeast. Overall, we like MHO to turn the corner and report a profit next year and break-even this year.
Disclosure: I am long (MHO).