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COPYRIGHT 2003 Adams Business Media
Pall Corporation
US Specialty & Major Chemicals: Jeffrey J. Zekauskas
(212) 622-6644
jeffrey.zekauskas@jpmorgan.com
Pall Corporation
Rating: Overweight
Company Description:
Pall is the largest and most diverse filtration company in the world. Pail's business is organized around two broad markets, Life Sciences and Industrial. with 10,700 employees in over 30 countries to support them. Sales in fiscal year 2002 were about $1.3 billion.
Investment Thesis:
We expect Pall to meet or exceed our F2003 EPS estimate of $1.05 per share (ends July): we project Pall to earn $1.35 per share in F2004. Pall is ahead of plan in achieving its stated annual cost synergies of $15 million, or $0.08-0.10 per share for both F2003 and F2004: Pall achieved cost synergies totaling $8 million, or $0.05 per share, for the first six months of F2003. Importantly, we believe that Pail's eventual integration savings are capable of being materially higher than the company's current forecast. Pall is poised for a solid 2003 EPS recover); despite a generally weak economic environment.
Pall's industrial operations are recovering: operating margins in Microelectronics grew 1,270 bp to 17.7% and Aerospace margins increased by 900 bp to 27.7%. Moreover, Pail's Blood business seems on track for meeting its goal of a 20% operating margin by the end of F2003. The company is experiencing lower manufacturing costs due to more automated processes of manufacturing blood filters and higher levels of blood donations. the $0.22 EPS improvement in F2003 assumes a...
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