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Thursday, Sep 5
Parker Hannifin initiated at Morgan Stanley with an Underweight; stock higher despite the cautious outlook
- Parker-Hannifin (PH +1%) trades higher today, thumbing its nose at Morgan Stanley's less-than-enthusiastic initiation of coverage with Underweight and $92 price target.
- The firm calls PH the purest play on global IP growth to be found in the Machinery group, but the stock's bull thesis center's on a stronger pickup in core growth in FY14, fueled by Machinery OEM/ dealer inventory restocking.
- Morgan believes that the company's FY year end timing makes it more likely to be a FY15 event.
- Currently, the stock trades at a rich 27% premium to its Machinery group and well above its 6% cross-cycle premium, so the "probability of the Bull Case playing out is low.”