From Standard & Poor's Equity Research
Friedman Billings upgraded Watts Water Technologies (WTS) to outperform, noting the company's second quarter earnings per share (EPS.)
Analyst Ned Armstrong says the company reported 57 cents second quarter EPS (excluding items), better than his and the consensus estimate of 51 cents. He says the company exhibited an ability to largely offset large raw material inflation (in copper and plastics.) He thinks his sales forecast should improve markedly over his forecast horizon, as higher-margin non-residential product applications accelerate (50% to 55% of sales.) He notes that management is also upbeat about the prospects for an increasingly robust acquisition environment. He raises his $2.10 2006 earnings per share (EPS) estimate to $2.15 and set his $2.50 EPS estimate for 2007. He also raises his $35 stock price target to $37.