Ahead of the Bell: Lincoln Electric Holdings

HARTFORD, Conn. (AP) — An analyst upgraded Lincoln Electric Holdings Inc. Tuesday, saying the welding-products manufacturer has strong cash flow and a "near debt-free" balance sheet that should help it navigate a sharp drop in commodity prices and a severely weakened economy.

Analyst Michael E. Cox of Piper Jaffray and Co. upgraded the Cleveland company to "Neutral" from "Sell." He maintained a $28 price target.

In a note to investors, however, Cox cautioned that earnings estimates remain at risk because of the recession and margins could drop below fiscal 2003 levels.

"The fundamental outlook remains very uncertain and profitability is likely to remain constrained throughout 2009, though we believe the company's ability to generate strong cash flows will provide support to the stock at current levels," Cox said.

Cox said he remains "comfortable" with a free cash flow estimate of $150 million for Lincoln Electric in fiscal 2009. He said risks include a slowdown in infrastructure spending and falling prices as commodity markets decline.

"From a fundamental perspective, price concessions are the biggest risk at this point with unit volumes already showing significant weakness," Cox said.