Federal-Mogul Corp. (Pink Sheets: FEMO) was raised from a Neutral to a Buy rating at Goldman Sachs this morning. Goldman Sachs noted that the 29% sell-off since its post-bankruptcy issuance has created a unique entry point. Its 6-month target is $27.00, which leaves an implied upside of greater than 30% compared to Monday’s close. The firm notes that its end market positioning is very defensive. It notes that 40% of sales come from the less cyclical after-market. It also likes its estimated implied free cash flow yield of about 11.2% already factoring in a recession, and back-end loaded growth and Carl Icahn owning more than 75% of the company is also discounted at the current price.
Federal-Mogul has only been post-emergence under the new ticker since early January and its shares have fallen from $26.00 to under $20.00, before closing at $20.48 yesterday. There are far too few analysts that cover this so far to derive a real consensus for an outlook, although that may change in the coming weeks and months.
Jon C. Ogg
March 4, 2008
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