Hudson Securities Upgrades AZZ Inc. to Buy (AZZ)

Hudson Securities is out with a research report this morning, where it reiterates its Buy rating on AZZ Inc. AZZ; it has a $47.00 price target on the stock, up from $43.00. The HS analysts cited the company's recent announcement of revenue and EPS guidance for FY2012. Revenue is expected to be in the range of $425-$450 million, EPS is expected to be in the range of $2.70-$3.05 million for full year FY2012. The EPS range includes about $0.34 in EPS dilution related to the recent issuance of $125 million in senior private placement notes. The analysts noted, “The guidance appropriately reflects a subdued environment in Electrical and Industrial but margin recovery in Galvanizing. Historically, AZZ has played its guidance pretty conservatively with regard to profitability in Galvanizing but zinc appears to be in a consistent range, steel prices are rising which tends to push up pricing for galvanizers, and capacity utilization is improving which should drive higher volumes.” As for valuation, the analysts remarked, “We are raising our price target to $47 from $43 based on 15x our 2012 EPS estimate of $3.10. This target would also represent approximately 7x our 2012 EBITDA based on pro forma 2011 year end cash and debt balances.”