ARM Leveraged To Next Truck Cycle

Analyst David Leiker of Robert W Baird upgrades ArvinMeritor Inc (NYSE: ARM) to "outperform," while raising his estimates for the company. The target price for ARM is set to $15.

ArvinMeritor reported its FQ1 results ahead of expectations, driven by better-than-expected revenue growth and margins. ARM’s “transformed business model is likely to generate higher returns and more stable earnings and cash flow over the next truck cycle due to reduced cost, improved operations, shifting business mix, and emerging market investments,” the analyst says.

“Balance sheet improved, though an equity offering to accelerate de-leveraging remains a future possibility,” the analyst adds. Robert W Baird has raised its EPS estimates for FY2010 and FY2011 from -$0.23 to -$0.11 and from $1.32 to $1.59, respectively.

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