Zacks Investment Research downgraded shares of Rexnord Corporation (RXN) from OUTPERFORM to NEUTRAL on January 03, 2014, with a target price of $28.00.
We find Rexnord well positioned to grow its Process & Motion Control and Water Management platforms by leveraging benefits from the increasing backlog in the non-residential construction market in the U.S. and Canada, growing demand for clean water and rising demand in the aerospace industry. Also, acquisitions are expected to play a major role in expanding the company's businesses. In this regard, the recent acquisition of Precision Gear Holdings is worth mentioning. The acquired assets will help widen Rexnord's product offerings within its Process and Motion Control platform. For fiscal 2014, management anticipates core sales growth to be within 3%-4% and earnings per share to be within $1.32 $1.38. Moreover, refinancing of term debts will have a positive impact on the company's free cash flow and earnings. Anticipating that the impacts of these positives have already been discounted in the company's share price, we have downgraded our recommendation from Outperform to Neutral.
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