Thursday, KeyBanc Capital upgraded Lincoln Electric Holdings Inc. (LECO) shares to Hold from Underweight. The brokerage maintained its 2009 EPS estimate of $2.00, and its 2010 estimate of $2.71.
Analyst Steve Barger said that his December 7 downgrade was based on the idea that 2009 consensus estimates were too high relative to deteriorating macroeconomic conditions. Given that disparity, the analyst suggested that actual results were likely to underperform expectations, which would lead to substantial downward EPS revisions, downgrades and share price weakness.
Since then, fiscal 2009 consensus has declined to $2.46 from $4.69, and LECO's shares have declined 38% vs. a 22% decline for the S&P 500. In the analyst's view, the reality of challenging end market conditions are now more fully priced into the shares.
The analyst believes that the combination of reduced expectations and LECO's aggressive headcount reductions and capacity rightsizing in the face of ongoing demand destruction implies that the risk/reward scenario is becoming more balanced. The analyst noted that his upgrade is not predicated on improving end market fundamentals and that further downside to his estimate and consensus potentially exists given extremely low-end market visibility.
That said, at the current share price we see diminishing downside opportunity, and the analyst would reduce short positions even though LECO does not appear overly cheap by historical metrics. The shares are currently trading at 14.5x the analyst's 2009 estimate of $2.00 and 11.8x consensus of $2.46 vs. its historical multiple of 12.5x.
Currently, LECO is down $0.43 or 1.48% and trading at $28.62.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.