Deutsche Bank Drilling Into Upside To 2015e Targets For Stanley Black & Decker

In a report published by Deutsche Bank, its drilling into upside to 2015e targets for Stanley Black & Decker SWK.

Deutsche Bank said that it emerged from SWK's Investor Day with even more confidence that numbers are moving higher from here, given that realization of mid single digit organic growth over 2010/15 and the achievement of 16-17% margins could see its 2015e EPS increase by 35%. “For the first time, management verbalized a long-term revenue target, of $15bn by 2015 – representing 12% 2010/15 CAGR. At first glance, this CAGR looks like a solid forecast, but it is inclusive of the following p.a. items: 6ppts contribution from M&A, 2ppts EM growth and 1ppt revenue synergies. As such, SWK is implying just 1-3% base revenue CAGR – surely a conservative estimate given that
proforma revenues were up 11% in 2010, even without the aid of a Construction recovery. As such, we believe it is more reasonable to assume mid single digit core growth over the next five years at a minimum – given that we would expect a few years of solid low double digit growth in 2012/13 on the back of the impending Construction recovery.”

Stanley Black & Decker closed yesterday at $75.69.