Citigroup Remains Unfavorable On SPX's Late-Cycle Exposures

Citigroup has published a research report on SPX Corporation SPW in anticipation of the company's annual Outlook meeting, which outlined such hot buttons as competition from China and Power Gen Cycles affecting 2011 guidance. In the report, Citigroup writes "The annual Outlook meeting for SPX on Jan 19 in NYC should reveal a number of key data points that industrial investors are keen to hear. Most importantly are the expectations for the power gen cycle and how management addresses the increased competition from China in dry-cooling projects, transformer pricing, and 2011 earnings guidance. Broadly, we remain unfavorable on late-cycle exposures and are mindful of SPX's 34% revenues bias to late-cycle. In addition, the stock is trading toward the high-end of its relative P/E range on 2011, which keeps us on the sidelines with our Hold rating. The bull case on the story could be in its 2012 outlook, where the shares are more attractive, just below the mid point of their range. We are not expecting the meeting to be eventful given the shares have modestly outperformed the group going into the meeting." Citigroup maintains its Hold rating and $71 price target. SPX Corporation closed yesterday at $73.84.