Ferro shares jump after upgrade on strong outlook

Shares of Ferro Corp. spiked Wednesday after an analyst said the specialty materials and chemicals maker likely will be able to improve earnings after posting a first-quarter loss.

The stock rose 80 cents, or 18.1 percent, to $5.17 in morning trading. Shares of Ferro, which makes nonstick coatings for cookware, as well as solar cell parts and metallic coatings, have traded between 81 cents and $24.13 in the past 52 weeks.

KeyBanc Capital Markets analyst Michael J. Sison upgraded the company to "Buy" from "Hold" and set an $8 price target, implying he expects shares to jump 83 percent from Tuesday's $4.37 close.

The upgrade came after Ferro posted a first-quarter loss and said sales dropped 39 percent.

But Sison said those results likely were the bottom, and performance should improve.

"We believe Ferro will emerge from this downturn a much leaner and better organized specialty chemical company with significant earnings potential down the road," he said in a note to clients.

Earlier this week Gabelli & Co. analyst Rob Felice took a more cautious approach to the Cleveland-based company's shares.

"On top of efforts to stabilize/improve earnings, we believe Ferro's focus over the next several quarters must be free cash flow generation, debt reduction and/or strategic alterations to its capital structure," he said.

Felice cut his rating to "Hold" from "Buy" and lowered his outlook for 2009 to a loss of 50 cents per share from a profit of 10 cents.

Analysts polled by Thomson Reuters expect, on average, a 2009 loss of 21 cents per share.

A Ferro representative was not immediately available for comment.