Tenneco shares jump on upgrade
Tenneco Inc. shares jumped the most in two months Thursday after an analyst dropped his "sell" recommendation for the largest maker of automobile exhaust systems.
Lake Forest-based Tenneco rose $2.25, or 10 percent, to $24.67 Thursday in New York Stock Exchange composite trading. The gain pared the stock's 12-month loss almost in half, to 7.2 percent.
The upgrade to "hold" by Itay Michaeli, a Citi Investment Research analyst in New York, came as the parts-maker posted a fourth-quarter loss of $72 million, or $1.57 a share, on restructuring and debt refinancing costs.
"With more stringent emissions regulations becoming law globally through 2012, Tenneco appears especially well positioned to capitalize on future growth," Michaeli wrote in a note to investor s.
Four analysts now rate Tenneco "buy," six "hold" and one "sell."
Tenneco said first-quarter revenue will be higher than a year earlier. Original equipment sales will grow 11 percent to 13 percent annually on a compounded basis from 2008 through 2012, based on "new business the company has been already awarded or expects to win," Tenneco said.
The fourth-quarter loss ended three straight quarters of increased profit. The company said the loss was due to $87 million in one-time costs for debt refinancing to lower interest rates, restructuring in Europe, and the closing of a French plant.
Excluding those expenses, Tenneco had a profit of $15 million, or 34 cents a share, matching the average of 11 analyst estimates compiled by Bloomberg and beating Michaeli's 27-cent estimate.
Sales climbed 29 percent to $1.57 billion on demand for emissions-control equipment. The gain underscored the company's "global geographic balance, particularly in expanding markets like China and South America," Chief Executive Officer Gregg Sherrill said in a statement.
The deficit reported Thursday compared with year-earlier net income of $15 million, or 31 cents a share, Tenneco said.
For the 12 months ending Dec. 31, Tenneco's sales rose 32 percent to $6.2 billion. For the year, it reported a loss of $5 million, or 11 cents a share, compared with a profit of $49 million, or $1.05, in 2006.