Stifel Nicolaus Ups Interface to Buy

From Standard & Poor's Equity Research

Stifel Nicolaus upgraded Interface (IFSIA) to buy from hold, noting the company's quarterly results.

Analyst John Baugh says the second quarter results were mixed, with revenue being above his estimate, orders being strong, and operating earnings per share (EPS) in line with his forecast. He believes disappointing results in the company's fabric division increases the likelihood that it will be divested, thereby reducing debt. He notes that the company's core carpet tile division looks very healthy, and the company's broadloom business showed a substantial rebound. He raises his 15 cents third quarter EPS estimate to 16 cents, his 59 cents 2006 EPS estimate to 60 cents, and his 78 cents 2007 EPS estimate to 80 cents. He has a $15 12-month target stock price.

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