Joy Global Analyst Target Cuts Make Value Stand Out More (JOY, CAT)

Joy Global, Inc. (NYSE: JOY) is getting slapped very hard today on two different analyst calls.  The drop is enough that you might think that Joy suffered from an earnings report that had no joy at all.  The reality is that these were mere price targets along with estimates being cut that did today’s damage.

William Blair cut its target to $90.00 and J.P. Morgan cut its target to $85.00 from $92.00. Jefferies set a much more conservative target price of $74 in the middle of May, so today’s move may simply be a catch-up trade.  Barclays cut the target down to $96 in early May. It is probably worth noting that today’s price target cuts are just a week ahead of the earnings report due on May 31, 202.

Today’s price target cuts still show upside in the stock with a consensus price target of $97.19 from Thomson Reuters, but that may be a figure which has not been updated since these two price target cuts were made.

Shares were at $89.71 at the end of February after another drop and the talk was that Joy Global could have been a takeover target back then.  If some were hoping that a buyout would come when the stock was at $89.00 or so, they must really love the thought of a buyout when shares are closer to $60.00.  It was the acquisition of Bucyrus by Caterpillar Inc. (NYSE: CAT) for a sum of $7.6 billion that caused some secondary and tertiary buyout hopes.  The equity market capitalization of Joy Global today is just under $6.4 billion.

Joy Global shares are down 6.3% at $60.00 and the 52-week range is $57.48 to $101.44.  This one has traded under $60.00 briefly today.

Joy Global operates under the two units of P&H Mining Equipment and Joy Mining Machinery, where it manufactures and markets original equipment and aftermarket parts and services for both the underground and above-ground mining industries and certain industrial applications.

JON C. OGG