Sterne Agee Raises SPX Target From $76 To $79

Sterne Agee has raised its price target on shares of SPX Corp. SPW to $79 (up from $76). “It is based on our 2011E EPS of $4.70 (N/C) and assumes that SPW trades at a 30% P/E premium to FactSet's S&P 500 2011E P/E of 13.0X (up from 12.5X previously) based on their forecast of S&P 2011E EPS of $95.83,” Sterne Agee writes. “Over the last 10 years, SPW current year P/E has averaged 16.2X in a range of 5.7X to 27.8X. SPX has been consolidating for almost two years as it restructured its operations and optimized its portfolio while awaiting a unified recovery for all of its four businesses to occur simultaneously.” Sterne Agee said that while it believes there is little downside to shares at these levels, even if SPW exceeds its guidance of this year, SPW's mid-late cycle exposure has made the shares more likely to outperform in 2011 than near-term. “Based on our 2011E EPS of $4.70, SPW is currently trading at a 9% premium to the S&P500,” Sterne Agee concludes. SPX Corp. closed Friday at $71.83.