Analyst: Manitowoc's Risk-Reward Profile Skewed To The Upside

Manitowoc Company Inc MTW announced a one-for-four reverse stock split in September, prompting some analysts to revisit their thesis.

The Analyst

Seaport Global Securities' Michael Shlisky upgraded Manitowoc's stock rating from Neutral to Buy with a price target raised from a split-adjusted $38 to $48.

The Thesis

Manitowoc's turnaround initiatives in the past have been more than offset by downside in the crane cycle, but this may no longer be the case, Shlisky said in a Monday note. (See Shlisky's track record here.)

After a meeting with Manitowoc management, Shlisky said the case can be made for a bottoming of the crane market. There are also observable signs of an operational turnaround, including a reduction in production time for crawlers from one month to one day, he said.

Although the turnaround in the crane business will likely be a U-shape rather than a V-shape, the longer-term upside potential is greater than the longer-term downside potential, Shlisky said. The stock should be attractive for investors who are "comfortable with a low-growth environment" moving forward, the analyst said.

Manitowoc's stock multiple deserves a boost, as it now appears the "worst is behind the company from a cycle standpoint" and ongoing initiatives to boost the business are gaining momentum, Shlisky said.