Wednesday, Credit Suisse upgraded Black & Decker Corp. (BDK) shares to Neutral from Underperform with a price target of $27. The brokerage maintained its 2009 EPS estimate of $1.55, and its 2010 estimate of $2.25.
Analyst Oppenheim upgraded the stock as valuation reflects current challenges. BDK now trades at 12x the analyst's 2010 EPS estimate, slightly above its 10-year average of 11x, and at about 5x normalized earnings of $5.65, although this level of earnings will likely not be seen again until 2012.
A tough selling environment will likely persist into 2010 (the analyst expects negative comps through first quarter of 2010), but he believes earnings (and margins) have seen their lows. Lean inventories in retail channel indicate eventual shift to re-stocking from de-stocking.
Inventory corrections at retail contributed to the recent sales decline at Power Tools and Fastening, and the analyst's channel checks indicate that big box stores are currently operating at very lean inventory levels. Negative comps are expected into 2010 but BDK stands to benefit from any inventory restocking should retailers see a pick-up in demand next year.
The analyst said that management remains focused on adjusting cost structure to respond to challenging environment. The analyst's sense is that the company continues to make significant adjustments to reduce SG&A (down 23% in first quarter) and he expects these benefits to mute the weak sales.
The analyst estimates second quarter EPS of $0.38, driven by a 28% sales decline and 360 bps operating margin contraction year-over-year. The analyst's price target of $27 equates to 17x his 2009 EPS estimate and 12x his 2010 EPS estimate.
The analyst's Neutral rating results from his expectation for further year-over-year sales and margin declines based on additional deterioration in new construction, remodeling, and consumer spending in 2009 and 2010.
Currently, BDK is up $1.21 or 4.40% and trading at $28.72.
For comments and feedback contact: editorial@rttnews.com
June 12, 2026 17:14 ET Major central bank action was the focus this week in economic news. The European Central Bank became the first major central bank to move in response to the rising inflationary pressures in the backdrop of the conflict in the Middle East. In North America, the U.S. inflation and trade data as well as Canada’s central bank decision gained attention. The Chinese trade data was the main news in Asia.