Deutsche Bank Updates 6/16

Deutsche Bank explained a number of updates in a research report published today. Deutsche Bank initiated its coverage of KKR Financial KFN with a Buy rating and a price target of $12.50. In the report, Deutsche Bank states, "KKR Financial continues to give attractive returns, as it makes new investments across its targeted assets and grows its portfolio.The portfolio's net long exposure to floating-rate investments should result in net interest income benefiting from higher LIBOR rates." On Wednesday, KKR Financial closed the day at $9.72. Deutsche Bank initiated a coverage of Willis Group WSH with a Hold rating and a price target of $44. The report states, "The company looks well positioned for strong long term revenue growth, with a global platform, underpenetrated markets and an aggressive sales culture. Essentially flat since ‘07, earnings were hurt by the HRH acquisition, closed in the recession and as P&C rates continued to deteriorate, as well as by $1.8 billion in associated debt and difficulties replacing contingent commissions." On Wednesday, Willis closed the day at $40.79. Barrick Gold ABX had its rating maintained at Buy and its price target reiterated at $76 in spite of an upward revision to the company's earnings estimates. The report states, "Barrick has acquired ~96% of Equinox (Hold, AUD7.80) and will proceed with a compulsory acquisition of remaining shares. 2011 and 2012 revised EPS estimates of $4.86 and $7.40 are 10% and 62% above Bloomberg consensus of $4.42 and $4.58. Equinox deal proves EPS accretive with 2011E and 2012E rising by 4% and 8% respectively." On Wednesday, Barrick closed the day at $43.93. Its shares lost 0.57% in today's pre-market trading, however, to trade around $43.68. Stanley Black & Decker SWK had its rating maintained at Buy and its price target reiterated at $90. The report states, "Over the past several weeks, the press (Reuters) has speculated about SWK's involvement in bidding for Securitas Direct, a pan-European Resi Security player. Mgmt's commentary around deals has become increasingly focused around Convergent Security (vs. Infrastructure, Healthcare and Engineered Fastening), and the company has noted that they are interested in deploying cash that is trapped overseas through European M&A." On Wednesday, Stanley Black closed the day at $67.73. ArcelorMittal MT had its rating maintained at Hold and its price target reiterated at $38.50. The report states, "Based on 1Q11 results, the mining segment would rank as #4 iron ore producer in the world, and is projected to grow 70% to 100m t by 2015. This figure does not include Baffinland, which has high Fe content ores (75% lump; 65% Fe). MT expects Baffinland to complete env work & feas. study by year-end, at which point will seek Board approval and additional commentary would be given. Shares currently trade at 5x and 8x vs. '12 EBITDA and EPS ests vs. peer group at 6x and 10x." On Wednesday, ArcelorMittal closed the day at $31.49. Its shares lost some value in today's pre-market trading, however, falling 0.64% to $31.29. Alpha Natural Resources ANR had its rating maintained at Buy and its price target reiterated at $67. The report states, "A key strength is the diversity of operations (PRB, NAPP, CAPP) and assets (incl Illinois). It is the #3 global met supplier and #5 overall supplier globally. The purchase of Massey further strengthens its CAPP presence. As well, it has the most export capacity in the US with 25-30m tpy available, with 10m tpy from Gulf Coast ports, which gives it geographic flexibility, as well as improved economics with rising rail freights." Arch Coal ACI had its rating maintained at Hold and its price target reiterated at $38. The report states, "The acquisition of International Coal coincidentally closed today, and on a PF basis, newco will be the 2nd and 10th largest US and global met coal supplier (11m t PF, going to 15m t). In terms of total annual production it will be #2 and #4 in the US and world, respectively. In the US, it will have the second largest reserve base (5.5b t). PF revenue and EBITDA expected to be +$5b and $1.4b in 2011; transaction accretive in '12e. Additional PF guidance will be provided in July." Patriot Coal PCX had its rating maintained at Buy and its price target reiterated at $34. In the report, Deutsche Bank states, "Amidst recent M&A uptick, PCX views itself as a consolidator in the space, as originally envisioned post-BTU spinoff. Attractive targets would need to be earnings accretive in near-term. M&A preference is for met assets, but could be hindered by recent valuation; overseas assets could be attractive, with thermal mines lower on the list of priority should price outlook improve. PCX feels that organic growth and select acquisitions, especially in met, is preferable over share buyback." On Wednesday, Patriot Coal closed the day at $20.36. Newmont Mining NEM had its rating maintained at Buy and its price target reiterated at $85. The report states, "Newmont management provided good detail on their recently announced 6‐ year target to reach 7m oz of gold production by 2017 (ie, 7/17 plan) which would imply a CAGR of ~6% from 2011 mid-point guidance of 5.2m oz versus consensus view that the company is ex-growth... As a result, we believe the pendulum continues to swing more in favor of a share buy-back given management's firm belief in the disconnect between its share price and underlying fundamentals." On Wednesday, Newmont closed the day at $52.31. Its shares lost some value in today's pre-market trading, however, falling 0.11% to $52.25. Nucor NUE had its rating maintained at Buy and its price target reiterated at $52. The report states, "Earlier in the day, NUE provided 2Q EPS guidance of $0.75-0.80, up from $0.50 in 1Q but below DBe of $1.08 and consensus of $0.85... NUE cited sequential improvement due to rising prices catching up with higher material costs. Meanwhile, production, shipments & orders declined q/q. Weather related disruptions on several Southeast facilities (Decatur/Yamato/ Hickman) contributed most, followed by supply chain invs rebalancing and ongoing Jpn supply chain impact." On Wednesday, Nucor closed the day at $39.80. In today's pre-morning trading, its shares rose 1.16% to $40.26, however. Goldcorp GG had its rating maintained at Buy and its price target reiterated at $60. The report states, "Goldcorp highlighted during its presentation that "it is a gold company and will remain such" and does not expect to diversify into copper or any precious metals (i.e., silver, palladium or platinum) other than via by-product credits. Company also provided compelling evidence of share price outperformance (+892%) vs gold prices (+480%) over the past 10 years, likely the only gold major that can claim that... Goldcorp has differentiated itself given its high quality asset base, aggressive portfolio management (acquiring value-enhancing assets and disposing non-core properties) and execution." On Wednesday, Goldcorp closed the day at $47.77. Its shares added 0.15% to their value in today's pre-market trading, however, to trade around $47.84.