Word on the Street

Analyst Actions: Rockwell Automation, Cardinal Health


Sterne Agee analyst Nicholas Heymann says Rockwell Automation's (ROK) first quarter EPS from continuing operations was $0.81, vs. his $0.84 estimate. He says what saved EPS was a tax rate of 17.1% vs. year ago's 28.5%.

Heymann thinks its Latin American business is expected to markedly deteriorate as backlog for process automation in mining and energy related businesses works off. He sees decreased likelihood of ROK being an acquisition candidate, given the downturn in OEM capital spending likely for the next few years. Furthermore, he says ROK is unlikely to have internal cash flow to go private any time soon.

He cuts $28 price target to $17. He had rated the stock neutral.


Goldman Sachs analyst Randall Stanicky says his downgrade of Cardinal Health (CAH) follows recent strength, with the stock up 14% over the past month, leaving him with 4% downside potential to his $36 6-month target.

He expects performance to remain stable, but its valuation is no longer a large enough discount to offset near-term operational headwinds.

Stanicky notes that a key pillar of his view had been the implied value in the Clinical & Medical Products business for which he now finds it harder to argue for significant unlocked value, given subdued hospital capex spending and his updated sum-of-the-parts analysis.

All of the views expressed in this research report accurately reflect the research analyst's personal views regarding any and all of the subject securities or issuers. No part of analyst compensation was, is or will be, directly or indirectly related to the specific recommendations or views expressed in this research report. Standard & Poor's Regulatory Disclosure

Any advice, analysis, or recommendations contained in articles labeled "Insight from Standard & Poor's" reflect the views of Standard & Poor's, which operates separately from and independently of BusinessWeek Online. It is possible that BWOL may from time to time publish information that is not consistent with advice, analysis, or recommendations that are published by Standard & Poor's. Standard & Poor's and BusinessWeek Online are each units of The McGraw-Hill Companies, Inc.

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