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June 23, 2014
13:49 EDTETN, MTOREaton climbs after settlement seen as less expensive than expected
Shares of industrial products maker Eaton (ETN) are advancing after the company reached a settlement of the antitrust lawsuit filed against it by ZF Meritor, a joint venture between Meritor (MTOR) and Germany's ZF Friedrichshafen. A number of analysts said that the settlement was more favorable to Eaton than they had expected and Meritor's stock is falling in the wake of the news. WHAT'S NEW: Eaton agreed to pay ZF Meritor $500M to settle the latter company's lawsuit, which alleged that Eaton had sought to stifle competition in the truck transmission market by giving rebates to truckers who bought its transmissions. ANALYST REACTION: In a note to investors earlier today, Wells Fargo analyst Andrew Casey wrote that the $500M amount was lower than most had expected, since Eaton may have had to pay $1.4B-$2.4B if the size of the payment had been decided through a trial. Additionally, the settlement removes uncertainty regarding Eaton, Casey stated. He kept an Outperform rating on the shares. Meanwhile, Morgan Stanley analyst Ravi Shanker responded to the news by raising his price target on Meritor to $17 from $15. The company will receive net proceeds of $209M from the settlement and it will use the proceeds to fund mandatory pension contributions for the next three years, Shanker stated. Additionally, the funds will boost Meritor's EPS and enable it to lower its debt, he added. By the second half of 2015, Meritor will use the remaining funds to help defray the cost of a share buyback program, according to the analyst. Although investors may be disappointed by the size of the settlement and the company's decision to initially channel it towards pension contributions, Shanker said he was not surprised by these developments, given the difficulty of predicting the outcome of the case and Meritor's focus on reducing its debt. He continues to like the company's fundamentals and kept an Overweight rating on the shares. PRICE ACTION: In mid-afternoon trading, Eaton climbed 2.2% to $79.28 and Meritor tumbled 12.3% to $12.80.
News For ETN;MTOR From The Last 14 Days
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July 30, 2014
10:00 EDTETNOn The Fly: Analyst Downgrade Summary
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09:03 EDTETNEaton shares attractive at current levels, says Wells Fargo
After Eaton announced that it could not spin off any businesses for at least five years without triggering tax consequences and the company cut its guidance due to subdued margins, Wells Fargo thinks the stock can advance from current levels. The firm expects the company to benefit from improving market demand in NAFTA truck and good year-over-year order growth in Electrical Products, ES&S and Aerospace. The firm expects the company's trends to rebound in 2015 and reiterates an Outperform rating.
07:12 EDTETNEaton downgraded to Hold from Buy at Deutsche Bank
Deutsche Bank downgraded Eaton to Hold with a $77 price target after the company lowered its 2014 outlook. Shares were also downgraded this morning at Goldman Sachs and JPMorgan.
05:37 EDTETNEaton downgraded to Neutral from Overweight at JPMorgan
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05:22 EDTETNEaton downgraded to Neutral from Buy at Goldman
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July 29, 2014
11:48 EDTETNEaton spin-off comments likely removes share support, says Wells Fargo
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06:38 EDTETNEaton reports Q2 Electric Products sales up 4% to $1.8B, bookings up 6%
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06:36 EDTETNEaton cuts FY14 EPS to $4.50-$4.70 from $4.50-$4.90, consensus $4.74
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06:35 EDTETNEaton sees Q3 operating EPS $1.20-$1.30, consensus $1.33
06:35 EDTETNEaton reports Q2 operating EPS $1.11, consensus $1.14
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July 25, 2014
05:20 EDTETNEaton, Shaanxi Fast Gear announce JV agreement
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July 18, 2014
16:46 EDTETNEaton narrows Q2 adjusted EPS view to $1.10-$1.12 from $1.05-$1.15
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July 17, 2014
10:00 EDTMTOROn The Fly: Analyst Initiation Summary
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