LOS ANGELES (AP) — Shares of Anixter International Inc. surged on Tuesday after an analyst upgraded the stock, saying it represents an attractive value.
THE SPARK: Baird Equity Research analyst David J. Manthey upgraded Anixter shares to "Outperform" from "Neutral," noting that the stock has fallen nearly 20 percent from its peak on April 26. In addition, preliminary data from a Baird survey suggests Anixter will post solid results through the rest of this year, he said in a note to investors.
THE BIG PICTURE: Anixter, based in Glenview, Ill., distributes communication and security products, electrical and electronic wire and cable and other components. The company sells these parts to manufacturers, who in turn use them to make products for the education, health care, power distribution, security, shipbuilding, telecommunications and broadcast markets. In April, the company reported its first-quarter adjusted profit nearly doubled amid strong sales.
THE ANALYSIS: Manthey said Anixter's stock appears to have the potential to increase as the company's earnings grow.
Data from Baird's second-quarter survey shows electrical and data communication product distributors are being quite positive on their quarterly and full-year expectations. Double-digit growth in electrical and data communications is expected to moderate, but remain among the strongest growth categories, Manthey said.
The analyst expects that, in the long term, Anixter's earnings per share can post growth in the mid-teens.
SHARE ACTION: Up $3.21, or 5.2 percent, to $64.39 in afternoon trading. Manthey's price target on the stock is $88.
