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Investing.com - Bank of America Securities upgraded Illinois Tool Works (NYSE:ITW) from Underperform to Neutral on Tuesday, raising its price target to $255.00 from $220.00. The industrial manufacturer, currently trading at $241.41 with a market cap of $70 billion, appears slightly overvalued according to InvestingPro Fair Value metrics.
The upgrade reflects BofA’s expectation of strong year-over-year margin expansion for Illinois Tool Works in 2026, which should drive more stable earnings per share growth in 2026 and 2027 after lagging peers from 2019 to 2025. InvestingPro data shows ITW currently maintains a healthy gross profit margin of 43.93% with diluted EPS of $10.31 over the last twelve months.
BofA analysts predict this margin improvement will help ITW’s EPS growth align more closely with industry peers in the coming years, despite still modeling below-peer organic growth of 2.5% versus the peer average of 4.0% for 2026.
The firm slightly raised its earnings estimates, now projecting GAAP EPS of $11.31 compared to the Street consensus of $11.26, though it remains cautious until seeing a more robust recovery in residential construction or consumer/auto markets.
BofA noted that while ITW has historically commanded premium valuations due to its best-in-class margins and returns, investors currently prioritize revenue and earnings growth over high margins, contributing to the stock’s relative derating over the past two years. InvestingPro data reveals ITW has maintained dividend payments for 53 consecutive years and currently offers a 2.67% dividend yield. The company trades at a P/E ratio of 23.42 and operates with a moderate level of debt. Discover more insights in ITW’s comprehensive Pro Research Report, available with an InvestingPro subscription.
In other recent news, Illinois Tool Works reported its third-quarter 2025 earnings, with an earnings per share (EPS) of $2.81, surpassing the forecasted $2.72. However, the company’s revenue fell slightly short of expectations, coming in at $4.06 billion compared to the anticipated $4.09 billion. Despite the earnings beat, the revenue shortfall raised concerns among investors. Additionally, Illinois Tool Works announced a quarterly dividend of $1.61 per share for the fourth quarter of 2025, to be paid on January 9, 2026. Meanwhile, Quanex Building Products Corporation appointed Mary K. Lawler to its Board of Directors, effective November 1, 2025. Lawler is currently the Senior Vice President and Chief Human Resources Officer at Illinois Tool Works. These developments reflect ongoing strategic and financial activities within both companies.
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