Wells Fargo Downgrades Tenneco From OP To MP

Wells Fargo has downgraded Tenneco Inc. (NYSE: TEN) shares to Market Perform.

“The company's emergence in commercial vehicle emissions controls should drive substantial earnings growth over the next few years,” Wells Fargo writes. “However, the stock is discounting sizable earnings upside relative to consensus expectations which leaves us a bit uneasy with an Outperform rating.”

Wells Fargo has increased its 2011E EPS to $2.92 (from $2.60) and its 2012E EPS to $3.60 (from $3.34).

“Our revised estimates include the benefit from the company's recent refinancing,” Wells Fargo concludes. “We have increased our valuation range to $40-44 (from $35-39). Our valuation range applies a 5.3-5.7x EBITDA multiple to our 2011E EBITDA. The stock's historical EBITDA multiple has been 5.1x.”

Tenneco currently trades at $40.94.