Goldman Sachs Neutral On Tenneco Inc. (TEN)

Goldman Sachs has a Neutral rating and a $48 price target on shares of Tenneco Inc. TEN after it reported earnings. In anote to clients, Goldman writes, "Tenneco reported strong 1Q results helped by both revenue and margins that came in ahead of our expectations. Our upwardly revised estimates reflect: (1) the impact of the 1Q beat, (2) a higher total revenue forecast mainly driven by higher aftermarket growth on the back of the recently announced $15mn new business win with 7 customers, partially offset by slightly lower growth in Asia, and (3) better cost control at the SG&A level. We note that our 2Q'11 estimate includes the one-time inventory changeover cost of $12mn that Tenneco expects to incur. We believe Tenneco represents an attractive secular growth story as the company is well positioned in key emission technologies like Selective Catalytic Reduction (SCR) and Diesel Particulate Filters (DPF) for on-highway and off-highway commercial applications, which underpins our projected 2010-13 revenue CAGR of 17%. In terms of margins, we think TEN will continue to benefit from operating leverage and a greater mix of revenue from commercial vehicles which are higher margin (on a value add basis), driving 170bps of margin expansion from 2010 to 2013." Shares of TEN closed at $43.61 yesterday.