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Analyts Actions: TMS International Target Price Raised $1 at Credit Suisse

Raising Estimates and Target Price to $12 (from $11).

Raising TP; Remain Outperform: "TMS remains a more defensive stock with some growth opportunities ahead, particularly internationally. We continue to believe that as the stock continues to execute, win new contracts and build a track record, TMS will gain traction as a unique value play in the industrial services arena. We are raising our 2011-13 EBITDA estimates to $135M, $143M, and $150M, respectively. We are also raising our 2011/2012/2013 EPS estimates to $0.83/$0.76/$0.86 (from $0.77/$0.73/$0.84) respectively. We raise our TP to $12 from $11, or 5.25x our 2013 EBITDA, discounted back. We reiterate Outperform."

Outlook Bullish: "TMS reiterated its 2011 EBITDA guidance of $133-$137M as well as new awards guidance of 8-10 new contract wins in 2011 with overall revenues of $400-450M. TMS has already received 6 contracts worth $143M YTD. Growth capex associated with these contracts is also expected to remain in the $40-50M range for 2011 implying Q4 growth capex of $17-$27M. The vast majority of opportunities remain in the international region, which is no surprise given that TMS is on ~50% of mills in the US."

Q3 Beat: "TMS reported Q3 EBITDA of $33.6M. Ex. a $745K expense tied to the departure of TMS's non-executive Chairman, EBITDA would have been $34.3M. Revenues after raw material costs totaled $139.3M, up 19.5% y/y, with Mill Services up 18% and RMOG up 32%. Mill Services growth was boosted by new contract revenues, fuel surcharges, an arbitration award, and higher revs from the UK. Total adj. EBITDA margin of 24.6% was down 130bps y/y due to fuel costs, startup costs on the 2 contracts won in the quarter, lower margin UK business being a higher mix of sales, and lower margin on two sites where TMS is renegotiating its contract."

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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