Citi raises estimates and target for global multi-industry manufacturing company SPX Corp. (SPW):
We are raising our 2008-2010 estimates on the back of continued strong power and infrastructure demand. Adding upside leverage to the SPX business model is the opportunity to improve margins in the core business and the recent APV acquisition.
SPX was recently awarded a $100mm contract to provide critical components for a large geothermal
installation in Iceland. This unique win adds to the global diversity of SPX’s power gen business.
Solar products also showing growth:
SPX is a leading provider of crystal growing equipment for the solar industry. While this business is small today orders are ramping quickly adding further diversity to SPX’s ability to tap power gen growth from multiple fuel sources.
Core thermal and transformer business remains robust:
Tight global reserve margins, ageing power infrastructure and increased concerns about reliability
continue to support a multi-year growth outlook for both power generation and
power transmission & distribution products.
Citi reiterates BUY, target from $140 to $155.