Sun Hydraulics +11% after Baird upgrade

• Sun Hydraulics (SNHY +11.1%) is upgraded to Outperform from Neutral with a $35 price target, raised from $27, at Baird, a day after Sun reported a slight Q3 earnings miss but issued upside Q4 EPS guidance of $0.21-$0.23 on r~$46M in revenues.
• Sun has agreed to buy the Power Controls and Vehicle Technologies lines of business from Enovation Controls for $200M, a deal Baird says appears to meaningfully upgrade Sun's electrical controls and display capabilities while broadening end markets into consumer and military applications; Sun expects the purchase to be $0.25-$0.35/share accretive in 2017.
• Baird says the deal marks an important shift in strategy under Sun's new CEO, with meaningful growth to the tune of $1B in revenue targeted by 2025, half through M&A.