Illinois Tool Works stock downgraded by Barclays on limited upside

Investing.com - Barclays downgraded Illinois Tool Works (NYSE:ITW) stock rating from Equalweight to Underweight on Thursday, setting a price target of $243.00. The industrial giant, currently valued at $77.92 billion, trades at 23.3x earnings and has demonstrated strong financial stability, according to InvestingPro data.

The downgrade comes as Barclays believes the expected recovery in organic sales is already factored into investor expectations, limiting potential upside for the stock. This view aligns with the company’s modest revenue growth forecast of 1% for fiscal year 2025, though investors might find comfort in ITW’s 29-year track record of consecutive dividend increases.

Barclays had previously upgraded Illinois Tool Works, anticipating a cyclical recovery in top-line organic sales following a decline in 2024, but now considers this recovery outlook "quite well embedded in investor expectations" and likely to begin in the current quarter.

The investment bank sees "limited scope for further surprise" in Illinois Tool Works’ performance unless there is a sharp improvement in residential construction or consumer spending, areas where the company has some exposure through its Construction Products segment.

Barclays expects that even if the sales recovery materializes as anticipated, Illinois Tool Works will likely lag behind the manufacturing industry average in organic growth next year, consistent with its typical performance pattern.

In other recent news, Illinois Tool Works reported its financial results for the second quarter of 2025, surpassing analysts’ expectations with record earnings per share of $2.58, compared to the forecast of $2.56. The company also reported robust revenue figures, reaching $4.1 billion, exceeding the anticipated $4.02 billion. Following these results, Stifel raised its price target for Illinois Tool Works to $261 from $255, maintaining a Hold rating on the stock. However, Truist Securities downgraded the stock from Buy to Hold, citing valuation concerns, despite acknowledging the company’s improved financial performance across several metrics. In other developments, Navan announced the appointment of Anré Williams, former CEO of American Express National Bank, to its Board of Directors. Williams brings over 35 years of executive leadership experience from his tenure at American Express. These recent developments provide investors with key insights into the performance and strategic changes within these companies.

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