Tuesday, KeyBanc Capital downgraded Altra Holdings, Inc. (AIMC) shares to Hold from Buy. The brokerage maintained its 2009 EPS estimate of $0.40, and its 2010 estimate of $0.60.
Analyst Jeffrey Hammond attributed the downgrade based on valuation, as stock has reached his price target of $9, and following a solid recovery in the company's share price from its March lows. The analyst continues to like the long-term story at AIMC, as the company possesses leading share positions in niche markets with higher barriers to entry and maintains a solid cost discipline under the Altra Business System.
While the analyst believes that management is appropriately focused on controlling cost amid the downturn, he would not look to add to positions until visibility improves and signs of demand stabilization emerge.
In the meantime, the analyst believes shares reflect an appropriate balance of risk and reward and is downgrading AIMC to Hold. AIMC is set to report its second quarter of 2009 operating results on August 3. The analyst maintained his second quarter operating EPS estimate of $0.08 (consensus is $0.07).
Based on industry data points and peer group commentary, the analyst believes AIMC will post annual results toward the low end of its revenue guidance range of $460 million-$500 million (he is modeling $465 million), but toward the higher end of its EPS guidance range of $0.25-$0.45 based on strong cost containment initiatives.
The analyst has reconfigured his second half of 2009 expectations to better reflect seasonality of the business and timing of restructuring benefits (lowering his third quarter of 2009 estimate to $0.07 from $0.10; raising his fourth quarter of 2009 estimate to $0.13 from $0.10).
Currently, AIMC is down $0.08 or 0.91% and trading at $8.75.
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