Analysts at Credit Suisse have raised their price target on
Ecolab Inc. (
) to $86 from $84, while maintaining its Outperform rating on the
"Following ECL's 1Q13 results, which came in slightly ahead of
expectations, and the closing of the Champion acquisition, we are
raising our 2013 estimate to $3.52 (from $3.47). The increase
mainly reflects the inclusion of Champion and falls in the upper
half of ECL's range ($3.45-3.55) as does our 2Q13 EPS estimate of
$0.84 (vs. ECL's range of $0.81-0.85). For the core businesses, we
are looking for an improvement in Y/Y growth in the Global Energy
division (ex-Champion) led by shale, deepwater and oil sands,
although in the Global Industrial and Global Institutional areas we
are looking for more modest growth as ECL faces some headwinds in
markets like paper, lodging and food service. In addition, we are
baking in the additional debt that ECL has taken on to close on
Champion as well as the completion of the $280 mil remaining on
their buyback authorization by year-end. Our 2014/15 estimates move
to $4.25/4.95 (from $4.03/$4.60)," said Credit Suisse.
"The 2013 outlook for ECL's business remains intact after a
solid start in 1Q, and we believe that ECL's FY guidance may prove
to be conservative, at least in part helped by a fairly benign raw
material environment. To reflect our slightly higher numbers, we
are raising our target price to $86 (from $84), which reflects an
11x multiple on our 2014 EBITDA estimate (putting 2013 FCF toward
net debt reduction)."
"ECL reported 1Q EPS of $0.60 ahead of the Street/us at $0.58
with most of the beat from stronger core operations. Overall, sales
of $2.87 bil were in line with our estimate, with sales +2% y/y,
led by volumes (+1%) and price (+1%). Leading sales growth was the
Global Energy segment with +7.5% growth driven by strong demand in
shale while also overcoming a tough comp of 29% growth last year
and modest sales declines in the downstream business."
Shares of ECL are flat in afternoon trade at $84.62, in the high
end of a 52-week range of $61.45 - $85.16.
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