J.P. Morgan Says Tenneco (TEN) Is A Growth Opportunity

J.P. Morgan analysts Himanshu Patel and Vivek Aalok maintained their Overweight rating for shares of Tenneco Inc TEN, with a price target of $28 per share. After attending Tenneco Inc's Analyst/Technology Day, Patel and Aalok said that the stock is one of the most attractive long-term growth opportunities in the automotive sector. Also, Tenneco announced that Deere & Company DE is the latest major company to choose Tenneco as one of its emissions after-treatment suppliers. The J.P. Morgan analysts wrote, "We continue to rate TEN shares Overweight. Our December 2010 price target of $28 is based on 11x P/E JPM 2012E EPS of $2.50. TEN trades at 8x our 2012E EPS estimate of $2.50, which implies a 6.5% margin. TEN has averaged 10x historically from a P/E perspective (a discount to higher growth ALV or BWA) but has at times approached 15x (e.g., much of 2007). We believe that an 11x multiple for TEN is reasonable given TEN’s secular growth story (in commercial vehicle business) and management’s continued focus on improving the balance sheet." Shares of Tenneco Inc surged more than 13% to $22.70 during the Thursday morning trading session.