Paccar (PCAR +1.8%) pushes higher after shares are upgraded to Outperform at both RBC Capital and BMO Capital.
RBC says it is more constructive on PCAR's end markets and earnings outlook, and sees the NAFTA Class 8 market as troughing in 2017 with Europe more resilient than feared; meanwhile, PCAR remains a best in class operator with a strong balance sheet and cash generation and an opportunity to improve margins as it increases internal engine penetration and parts revenues rise.
RBC also upgrades Colfax (CFX +3.9%) to Outperform, seeing CFX's markets at or near a bottom, which along with restructuring actions should support better growth ahead for a company with potentially significant untapped earnings power and ability to generate cash.
Argus has upgraded Colfax (CFX +3.3%) to Buy from Hold, stating the company is making progress on both revenue and margins.
"Over the long term, we see Colfax, a mid-cap company with a focus on power generation, energy and infrastructure, as an emerging leader in the Industrial sector," the firm said, assigning the stock a price target of $44.
SPX Flow’s (FLOW -4.1%) Q3 preliminary earnings miss is “clearly unfavorable” and points to the most downward risk for estimates for peers Flowserve (FLS -0.2%) and Colfax (CFX -0.2%), according to analysts at William Blair.
FLOW yesterday issued downside Q3 guidance, seeing EPS of $0.30-$0.35 vs. $0.47 analyst consensus estimate, on revenues of $467M vs. $497M consensus; prior guidance was for EPS of $0.40-$0.50 and revenue of $490M-$510M.
Q3 orders and backlog declined sequentially by 6% and 2%, respectively, primarily reflecting lower levels of original equipment orders in energy markets and lower orders for systems in food and beverage markets, which FLOW says has caused it to reassess Q4 expectations.
Adjusted net income of $63M, or $0.51 per diluted vs. $89.7M, or $0.72 per diluted share in the same quarter a year ago.
Gas- and fluid-handling orders decreased by 22.3 to $443M vs. $570.1M (an organic order decline of 18.8%).
Gas- and fluid-handling finished the period with backlog of $1.1B.
"While the demand environment remains weak in both business segments, we are on track to deliver the $100M in cost reductions from our 2014 cost base by the end of 2016," CEO Matthew Trerotola said. "Execution of cash conversion management was outstanding in the quarter."
Adjusted net income of $29.5M, or $0.24 per diluted vs. $71.3M, or $0.57 per diluted share in the same quarter a year ago.
Gas- and fluid-handling orders decreased by 17.6% to $444.2M vs. $539.4M (an organic order decrease of 12.5%).
Gas- and fluid-handling finished the period with backlog of $1.3B.
"Third quarter performance fell short of expectations," CEO Matthew Trerotola said. "By the end of 2016, we now expect to eliminate in excess of $100M from our cost structure and reduce the workforce by approximately 1,500."