Tuesday, December 7, 2010

Polypore International (PPO) Surges Higher on Upgrade

Quick word on the market - the tax news has obviously taken us in premarket over the yearly highs of S&P 1227.  After the surge to start the month, we had one whole day of consolidation (yesterday) and now a new run.  I figured (ex-news) we'd have 2-3 days of consolidation and then an attempt at bursting over the highs of the year, but the news event changed things. We'll see if the market can come in and fill the gap it will create this morning but it is all systems goes in the unshortable market as no serious news remains for the rest of the year outside of Europe.  Which also is in the paper it over and kick the can down the road mode.


Even after all these years, I remain in awe of the power of analysts to move stocks - watching the herd react is an amazing thing.  Yesterday, Polypore International (PPO) received an upgrade based on the exact same reasons I like the stock (wow, was it really a news flash that there is an opportunity here in the lithium battery business?), and the lemmings moved en masse.  The analyst "feels more confident" after speaking to management - surely a reason for a stock to increase it's valuation by nearly 20% in 1 day.

Much like during the internet bubble, the stock ran immediately to the analysts 1 YEAR price target.  Ah, I love the era of easy money part deux.

Via TheStreet.com
  • Shares of Polypore International broke out to a new 52-week high Monday after Robert W. Baird lifted its rating on the stock to outperform, in part because of burgeoning optimism about electric cars.
  • Charlotte, N.C.-based Polypore makes polymer-based membranes for a number of filtration and separation applications. About two-third of its business is in energy storage, specifically usage of its products in lithium and lead-acid batteries, and that's where Baird sees a growing opportunity as production of electric-drive vehicles, or EDVs.....begins to ramp up.
  • "We are upgrading the shares based on an improved confidence level that aggressive capacity additions will be matched against forecast EDV production related demand," the firm said in a note to clients. "Matching of supply and demand suggest PPO [Polypore] margins should hold reasonably firm and our revenue/EPS estimates hold upside." 
  • "[W]e believe PPO's strong initial competitive position in lithium separators for EDVs should drive share gains in the separator market globally," said the firm, which set a 12-month price target of $43 on the stock.  (1 year price target reached in 6.5 hours)

No position  


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