JP Morgan Gives Mohawk Neutral Rating

New York, NY, Oct. 8--Analysts at JP Morgan initiate coverage of Mohawk Industries with a "neutral" rating. Shares of Mohawk Industries, a provider of carpets, rugs, ceramic tiles and related flooring materials to the buildings and construction industry, are currently trading at $74.70. According to JP Morgan’s research note published this afternoon, Mohawk Industries is attractively positioned to benefit from the underlying consolidation trends in the carpets and floorcovering materials industry. The analysts mention that the company is poised to gain additional marketshare through its impressive manufacturing and distribution model in the near term. However, the current valuation of the company’s stock has limited upside potential in the near term, JP Morgan says. The analysts expect Mohawk Industries’ continued acquisition program to significantly boost its earnings growth prospects in the long term. However, JP Morgan believes that the company’s near-term earnings growth prospects have already been factored in after the sharp share price rally since March this year. The analysts express their concern regarding the recent decline in Mohawk Industries’ capital returns. The EPS estimates for 2003 and 2004 are $4.52 and $5.15, respectively. The P/E estimates for 2003 and 2004 are 16.5x and 14.5x, respectively.