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Shares of Federal Signal (NYSE:FSS) were upgraded to Buy from Neutral, with the price target lifted to $46 from $39 per share by DA Davidson Friday.
The firm decided to raise its rating and price target on the stock following its industrials conference and subsequent follow-up call with management.
DA Davidson analysts said in a note to clients that the broad theme of owning a government-focused Machinery company in a recession “remains appealing,” and this time, it is backed by large and already-passed stimulus bills.
In addition, the firm agrees that government-related spending is likely to remain strong in a recession, and “this time, the stimulus is built-in.”
“Beyond that, however, we were intrigued by management’s comments about the TowHaul deal and ability to maintain pricing when commodity prices revert. In our view, the stock could see increased investor attention as macro, end-market, and company-specific sources of upside converge,” they concluded.
