Liking the general overall performance of Tyco International (NYSE:TYC) in the fourth quarter, FBR sees trends working in their favor.
FBR says, "Tyco delivered a solid all-around performance on key metrics of organic growth (4% versus 2% in the September quarter), a 130-bp increase in margins, and continued operating improvements at Security Solutions (ADT) where margins hit an all-time high of 16.7%...We continue to remain bullish on Tyco and are enthused to see meaningful improvement in orders in the company’s mid- to late-cycle businesses in Flow and Fire (total 49% of revenues). As revenues in these businesses recover, the company’s now-much-leaner cost structure should result in high operating leverage and improvement in earnings. We also see upside from aggressive share repurchases and acquisitions, where the company’s strong FCF (about $1.4 billion in FY 2010) and underlevered balance sheet (11% net debt to cap) provide for ample flexibility. We are raising our 2011/2012 estimates from $2.95/$3.50 to $3.05/$3.60 to reflect improvement in underlying trends."
FBR Capital maintains an "Outperform" rating on Tyco International (TYC), which was trading at $44.69, down $0.05, or 0.11 percent, as of 2:04 PM EST. FBR raised their price target on Tyco from $47 to $51.
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