Major mining equipment manufacturers downgraded by JP Morgan
JP Morgan Securities has downgraded expectations for two of North America's top minng equipment manufacturers, Joy Global and Bucyrus International in line with the fall in mined commodities prices.
BANGALORE (Reuters) -
J.P. Morgan Securities downgraded Joy Global Inc (JOYG.O) and Bucyrus International Inc (BUCY.O) to "underweight" from "neutral," saying the mining equipment makers are likely to face a deeper and longer-than-expected cyclical decline in orders.
"We view mining as classic late cycle--an industry that lags on the way up and the way down. As such, we expect the negative earnings revisions to continue into 2010 and beyond," analyst Ann Duignan wrote in a note to clients.
Duignan said she favored early cycle stocks whose end markets are closer to trough.
Joy Global on Wednesday forecast 2009 results below market expectations and said it expected a slowdown in orders as customers were becoming more selective about their new mine expansion projects.
Given that Bucyrus and Joy Global share the market, Duignan said she expected similar commentary from Bucyrus in the near term.
If commodity prices continue to remain low, industry capex reductions are expected to continue, she added.
The analyst set price targets of $23 on Bucyrus stock and $25 on Joy Global shares.
Shares of Joy Global were up 1 percent at $25.80 while Bucyrus shares were down 1 percent at $22.32 in pre-market trade Thursday.
(Reporting by Antonita Madonna Devotta in Bangalore; Editing by Gopakumar Warrier)
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