NEW YORK Global Brass & Copper Holdings Inc.s (GBCs) stock is up about 10 percent since its initial public offering (IPO) in May, and Morgan Stanley Research analysts expect the companys share price and earnings to improve through 2014 on the back of an overall improvement in end markets such as housing and automotive.
GBC had hoped to raise $172.5 million with the IPO, which began trading May 23 at $11 per share, to settle some debt and fund potential future acquisitions (amm.com, May 31). A GBC spokesman said the company was in a "quiet period" and could not comment until it releases its second-quarter results in August.
GBC stock ended last week at $14.89 per share on the New York Stock Exchange, up from $13.55 at the close May 23.
Morgan Stanley analysts estimated that the Schaumburg, Ill.-based companywhich owns copper product producers Olin Brass Corp. and Chase Brass & Copper Co. LLC, as well as distributor A.J. Oster Groupwill generate earnings of $119 million this year.
"We view the stock as an attractive value play on U.S. domestic growth, particularly in housing and autos," Morgan Stanley said in a report, estimating that 50 percent of GBCs products will be shipped to the housing and the auto industries.
Morgan Stanley expects 982,000 housing starts this year, rising to 1.21 million next year, and production of 16 million vehicles, climbing to 16.5 million in the same comparison.
GBC also could be positively impacted by other growth opportunities in the copper industry, Morgan Stanley said, including anti-microbial products, lead-free brass products and the possibility of the issue of a $1 coin.
GBC also is a major player in the ammunition market, with about 20 percent of its shipments going to that sector, although possible legislation restricting the private use of firearms as well as military budget cuts could be have a negative influence, the analysts said.