Manitowoc (MTW) has been among the top-performing U.S. machinery stocks this year, but today it was one of the worst, -5.2% after a Jefferies downgrade due to valuation.
The firm says its channel checks and conversations with industry participants continue support its belief that cranes - lattice-boom cranes, tower cranes, mobile telescopic cranes, boom trucks - will be a 2015 story.
MTW shares trade at an EV/sales multiple of 137% and an EV/EBITDA multiple of 11.1x on 2014 estimates, significant premiums to the closest competitor (Terex: 80% EV/sales, 8.0x EV/EBITDA).
YTD: MTW +32.3%, CAT +6.6%, TEX +2.3%, JOY -2.9%, DE -3.1%.
Caterpillar’s (CAT) shares have gained 6.7% YTD, more than double their 2013 gain, and Deutsche Bank's Vishal Shah thinks they can move another 25% higher, rating CAT a Buy with a $122 price target.
Shah believes investors are overly focused on the decline in CAT's resource industries revenue, which will likely trough earlier than expected in 2014, and are neglecting the significant growth opportunities within the construction segment over the next 3-4 years as well as consistent execution within the power systems segment.
The firm eyes a recovery in the overall U.S. machinery sector driven by accelerating global GDP growth; it rates Deere (DE), Cummins (CMI) and Terex (TEX) as Buys but rates Joy Global (JOY), Manitowoc (MTW) and Agco (AGCO) as Holds.