“We are raising our rating on Tyco International Ltd. (TYC) to BUY from HOLD, and setting a target price of $65. Tyco is seeing solid growth in net orders and backlog, and operating margins are improving across its businesses.
“The company plans to split into three separately traded entities, and recently announced the merger of its Flow Control segment with Pentair (PNR). The transaction has generated considerable interest among both investors and potential acquirers of Tyco’s remaining business segments, and should provide value for both TYC and PNR shareholders.
“We also believe that management has chosen an opportune time for this action, as Tyco’s balance sheet is healthy and the separation will help to highlight the improving fundamentals of each business. Tyco plans to complete the Pentair merger and split its remaining two segments by September 2012, which should serve as a catalyst for further price appreciation.”
- Nathaniel Gabriel, Argus Weekly Staff Report, April 16, 2012