JP Morgan Reduces Estimates On Minerals Technologies

JP Morgan has published a research report on Minerals Technologies MTX following 3Q results that reported increased sales and profits. In the report, JP Morgan writes "MTX's 3Q:10 consolidated sales increased 7%, gross profit improved 19%, operating income rose 75%, and pro forma EPS expanded from $0.53 to $0.90. Higher year-over-year utilization rates and operating leverage in the Refractories business and healthy demand in the Processed Minerals division servicing the automotive end market aided these results. MTX's general operating structure is much improved as its businesses emerge from a cyclical trough. SG&A expenses in the quarter were (8%) lower despite 7% sales growth. We note that Refractories profits decreased sequentially from $9.6M to $6.3M reflecting higher raw material costs and lower utilization rates. The PCC business is contending with lower prices due to contract renegotiations and higher raw material costs. We believe these headwinds should continue over the next two quarters. The Processed Minerals division is entering a seasonally slower quarter for products sold to the construction end-market, and automotive builds are likely to slow. Accordingly, we reduced our 4Q:10 and year-ahead estimates." JP Morgan maintains its Overweight rating and $66 price target. Minerals Technologies closed Friday at $58.67.