Barclays upgrades Emerson stock rating to Equalweight on valuation

Investing.com - Barclays (LON:BARC) has upgraded Emerson (NYSE:EMR) from Underweight to Equalweight while slightly raising its price target to $127.00 from $125.00. According to InvestingPro data, Emerson, a prominent player in the Electrical Equipment industry, maintains a ’FAIR’ financial health score with strong profit metrics.

The upgrade follows an 8% decline in Emerson’s stock price relative to the S&P since earnings season began, which Barclays indicates has brought the valuation to a more reasonable level after a period of multiple expansion.

Barclays notes that Emerson had benefited from investor enthusiasm around an "industrial recovery without a consumer recovery" narrative in recent months, leading to a sharp re-rating of the stock’s multiple as investors anticipated accelerating growth exiting 2025 and into 2026.

The research firm expresses skepticism about this industrial-led recovery thesis, stating that historically, consumption and consumer goods demand typically lead industrial rebounds rather than the reverse.

Barclays points to evidence from the current earnings season, now 95% complete in their sector coverage, suggesting "no such industrial recovery seems to be occurring," prompting investors to recalibrate their growth expectations downward.

In other recent news, Emerson Electric Company reported its third-quarter 2025 earnings, exceeding expectations for earnings per share (EPS) but falling short on revenue. The company announced an EPS of $1.52, slightly above the forecast of $1.51. However, revenue came in at $4.55 billion, missing the anticipated $4.61 billion. This revenue shortfall has raised concerns among investors. Despite the EPS beat, the stock experienced a decline in premarket trading. These developments have drawn attention from various analyst firms. The earnings report highlights the importance of revenue performance in investor sentiment.

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