Analyst Actions: Emerson Electric, Medcath
JP MORGAN DOWNGRADES EMERSON ELECTRIC TO UNDERWEIGHT FROM NEUTRAL
JP Morgan analyst C. Stephen Tusa, Jr says he's concerned that, despite current strong energy fundamentals, approaching capex cuts at oil and gas customers are likely to lead to order and demand pullback.
Tusa notes that Emerson Electric (EMR) has the second-highest exposure to oil and gas in the EE/MI group. He also sees risk around the company's network power unit and thinks the other businesses will be of little help.
He says fundamental end-market challenges make it tough to consider EMR a relatively safe place to hide form cyclicality. He cuts $2.85 fiscal year 2009 (September) EPS estimate to $2.80, sees $2.45 for fiscal year 2010.
RAYMOND JAMES CUTS MEDCATH TO MARKET PERFORM FROM OUTPERFORM
Raymond James analyst John Ransom says he cuts his rating for Medcath (MDTH) on its disappointing fourth quarter and suspended financial guidance, which will complicate the model.
While acknowledging that the stock is relatively cheap (around 5.5 times likely pro-forma fiscal year 2009 EBITDA estimates), he believes there is limited near-term catalysts to warrant a more positive rating.
Ransom notes that the company's $0.13 adjusted fourth quarter EPS from continuing operations were $0.14 below the $0.27 consensus, and his $0.26 forecaset, as higher operating expenses and uncompensated levels of care offset sequential improvements in volumes, inpatient stent procedures, and inpatient surgeries.
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