Thursday, KeyBanc Capital upgraded Brady Corp. (BRC) shares to Buy from Hold with a price target of $36. The brokerage raised its 2009 fourth quarter EPS estimate to $0.43 from $0.39, its 2009 estimate to $1.69 from $1.65, and its 2010 estimate to $1.89 from $1.78.
Analyst Anthony Kure said that ahead of BRC's fiscal fourth quarter and fiscal 2009 earnings release, he upgraded the stock to Buy with price target of $36 as he now feels the company is well positioned, relative to its fragmented competitors, to leverage stabilizing global demand conditions.
Despite the year-to-date outperformance, +25% year-to-date vs. +14% for S&P 500, the analyst believes the shares remain undervalued as he expects the company will exceed consensus EPS estimates for fiscal fourth quarter of 2009, currently $0.41.
In addition, the analyst believes the company would announce a full-year EPS guidance range, as a part of its earnings release, which would likely prompt upward estimate revisions for fiscal 2010. At the present time, the consensus estimate for fiscal 2010 stands at $1.76.
The analyst believes this estimate does not fully capture what he believes would be an improved profit performance in a return to a more normalized, albeit modest, return to core growth. BRC's fiscal 2009 guidance is for EPS in the range of $1.61-$1.80, which implies a fiscal fourth quarter EPS guidance range of $0.36-$0.55.
While the analyst expects visibility to remain limited due to nature of BRC's MRO-type sales, which are characterized by rapid order fulfillment of the relatively small orders sizes, he thinks the longer-term upside potential for the shares, based on recent stabilization and sequential improvement in the macro economic environment and solid execution of a differentiated strategy, outweighs the downside risk.
In addition, the analyst believes the company's restructuring and cost reduction actions implemented through fiscal 2009 would likely yield an incremental $0.10-$0.15 to fiscal 2010 EPS through the course of fiscal 2010 and have attempted to capture this in his outlook.
Currently, BRC is up $2.24 or 7.28% and trading at $33.02.
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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.