J.P. Morgan Assumes GPC Coverage At Neutral, $57 PT

J.P. Morgan is assuming coverage of Genuine Parts Company GPC with a Neutral rating and a $57 Dec 2011 price target (under prior JPM coverage, said that it was Neutral with a $48 PT). “Our price target implies 7% potential upside (based on 16.3x P/E using our 2011 forecasts),” J.P. Morgan writes. “We believe the risk-reward improves near $48 given a ~14x PE and approaching a 4% dividend yield. GPC positions itself along an equity income profile given its businesses (50-50 cyclical vs. defensive), targeted 6-8% sales growth, margin expansion plus modest stock buyback adding a few points of incremental EPS growth, and a 3-4% yield. “While the dividend rate and consistency support lower downside, and we believe GPC will experience a ‘goldilocks' backdrop for a period in 2011, the cyclical slowdown expected in Auto in 2012 should weigh on future earnings growth.” Genuine Parts Company closed Monday at $53.11.