KOP: R&UP Well-Positioned For 2011-2012

Analysts at Jefferies & Co reiterate their "hold" rating on Koppers Holdings KOP, while reducing their estimates for the company. The target price for KOP is set to $26. According to Jefferies & Co, “Seasonal declines in co-products should also translate into narrower spreads against petrochemical substitutes. This effect could be aggravated this year by the sharp declines in the petrochemical chain in 2H10.” “While 2010 is on track for a 17% reduction in tie procurement, QoQ volumes should be positive, with orders running 126,000 ties/week in July from 110,000 ties/week in Q2. Even so, we estimate untreated ties could be down 25%-30% YoY, even as TSO momentum likely fades after rising 2%-3% in 1H10. While this sets the stage for a recovery, we believe the railroads may take 2-3 years to reverse the inventory reduction as a quiescent lumber market leads to higher sourcing costs for the railroads. In essence, one side-effect of a housing recovery would be a more favorable environment for crosstie sourcing,” the analysts add. Jefferies & Co has lowered its EPS estimates for 2010 and 2011 from $2.80 to $2.55 and from $3.15 to $3.00, respectively. More Analyst Ratings here