Profit Beat, Double Upgrade Fuel Manitowoc Fire

The crane manufacturer's quarterly revenue fell short, though

by Karee Venema

Published on Nov 8, 2019 at 9:12 AM
Updated on Nov 8, 2019 at 9:45 AM

The shares of Manitowoc Company Inc (NYSE:MTW) are set to open up more than 8%, after the crane manufacturer reported adjusted third-quarter earnings of 54 cents per share, blowing past the 34 cents per-share profit analysts were expecting. This is offsetting a top-line miss, with Manitowoc recording revenue of $448 million for the three-month period, compared to the consensus estimate of $455.8 million.

A round of bullish brokerage notes is likely fueling the fire. Most notably, Goldman Sachs raised its rating on MTW stock to "buy" from "sell," and boosted its price target by $6 to $18 -- a 29.3% premium to last night's close at $13.92. The analyst in coverage said construction stocks are at "historically low" valuations amid a broader recovery in equipment demand. UBS also lifted its Manitowoc price target, to $16 from $15.

Analysts have been mostly skeptical of MTW stock, with 71% maintaining a "hold" or worse recommendation prior to today. This pessimism is seen elsewhere on Wall Street, too, with a healthy 7% of the security's available float controlled by short sellers.

Plus, Manitowoc's Schaeffer's put/call open interest ratio (SOIR) of 2.87 ranks in the 89th annual percentile, meaning short-term traders are more put-heavy than usual toward the stock. Peak open interest on MTW is found at the December 13 put, and data suggests most of the activity here has been of the buy-to-open kind.

Looking at the charts, MTW shares were down 29% year-over-year through last night's close. However, the stock has been bouncing since its Oct. 9 two-year low at $10.49, easily on track for its fourth straight weekly win. What's more, today's projected pop could put the equity on pace to close above its 30-week moving average for the first time since early August.

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