Updated to include UBS, Wells Fargo analyst comments and additional data.
NEW YORK ( TheStreet) -- An economic recovery and a 2012 share surge may not be enough for Ingersoll Rand (RAND) after the Nelson Peltz-run activist fund Trian Fund Management announced a 7.33% stake in the industrial conglomerate.
When unveiling its Ingersoll Rand stake, the investment fund headed by Peltz said that it would look to launch discussions with management on how to improve the 141-year old company's lagging earnings and shares.
While Trian indicated that it would push for some financial changes like share repurchases and an increase of the company's leverage, it left the door open for a much broader restructuring of the company's diverse portfolio of industrial, tools, compressed air and transportation units.
"We view this as a likely short term positive for IR," writes Wells Fargo analyst Andrew Casey in a note to clients. He gives shares an outperform rating, meanwhile Feldman of UBS gives Ingersoll Rand shares a buy recommendation and a price target of $45. Overall, analysts polled by Bloomberg give Ingersoll Rand a price target of $45.18, on 12 buy recommendations, 10 holds and no sells. Ingersoll Rand saw its first-quarter earnings swing to a $95.6 million profit, after it reported a $68.5 million loss in the same period a year ago. Still, in 2011, the company's profits were nearly halved to $343 million, even as revenue grew roughly 5% to $14.7 billion. Peltz is known as an activist investor after taking large holdings in companies like Family Dollar (FDO), Kraft Foods (KFT) and Wendy's (WEN) and offering takeover bids or restructuring initiatives. In 2011, Family Dollar fended off a takeover offer from Peltz while Kraft Foods said it would spin off its snacks business to focus on its grocery store businesses. In Trian's Wednesday filing, the investment fund suggested that it would push for Ingersoll Rand to increase its use of debt to launch a share buyback program and it would also try to better align management incentive's with the company's financial performance. Terms like "strategic alternatives" and the "restructuring of its key business segments" indicate that Trian Funds could push for much more sweeping change. Activists and unsolicited takeover offers have played a big role in the recent turnaround of struggling large-cap companies. For more on recent examples of activism and share recoveries, see why a kinder, gentler activist emerged in recent
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV