Legg Mason Upgrades Pentair to Buy

Analyst Laurence Baker sees a stronger earnings outlook for the machinery and power tools maker

Legg Mason upgraded Pentair (PNR ) to buy from hold.

Analyst Laurence Baker says he raised the 65 cents first-quarter earnings per share estimate to 74 cents to fall in line with the company's recently revised guidance. He also upped the $3.25 2004 estimate to $3.35.

Baker sharply boosted the $3.50 2005 earnings per share estimate to $3.80 to reflect continued improvement of sales and margins in Pentair's existing businesses of water and enclosures. He says higher the 2005 earnings outlook also reflects the sale of Pentair's tools segment for sufficient funds to acquire Wicor Industries, and the pump and water business of Wisconsin Energy.

Baker believes Pentair should sell at a multiple of 16 times his 2005 earnings per share estimate, which provides a target price of 61.

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