Zacks Investment Research upgraded shares of Leggett & Platt Incorporated (LEG) from UNDERPERFORM to NEUTRAL on May 22, 2012, with a target price of $21.00.
Leggett posted a flat year-over-year earnings of $0.30 per share for first-quarter 2012, benefiting from increased sales, but offset by higher tax rate. Further, quarterly earnings fell short of the Zacks Consensus Estimate by a couple of cents. Total sales climbed 5.7%, primarily driven by the acquisition of Western Pneumatic Tube and increased same-location sales. Anticipating a modest economic recovery, the company raised its fiscal 2012 earnings projection to a range of $1.25-$1.45 per share from $1.20-$1.40 guided earlier. Moreover, the company's strategy to optimize capital allocation and increase focus on core businesses bode well for future operating performance. However, intense competition from global and regional players, volatility in raw material prices and exposure to adverse foreign currency translations may undermine the company's future performance. Currently, we are maintaining a long-term Neutral recommendation on the stock.
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