Melius upgrades Eaton stock rating to Buy on AI capex reacceleration

Investing.com - Melius Research upgraded Eaton Corporation (NYSE:ETN) from Hold to Buy and raised its price target to $495.00 from $412.00, representing a 35% upside potential from current levels. The stock has shown strong momentum, gaining over 25% in the past six months, though InvestingPro data indicates it’s currently trading above its Fair Value.

The upgrade comes after Melius previously downgraded Eaton to Hold earlier this year due to concerns about valuation and slowing earnings momentum.

According to Melius, these concerns have now "dissipated" due to reaccelerating artificial intelligence capital expenditure news flow and what the firm describes as "a less demanding valuation."

The power management company has been positioned to benefit from increased investment in data center infrastructure needed to support artificial intelligence applications.

Eaton Corporation provides energy-efficient solutions that help customers effectively manage electrical, hydraulic, and mechanical power more efficiently, safely, and sustainably.

In other recent news, Eaton Corporation has been the focus of several analyst reports highlighting its growth prospects and strategic positioning. Bernstein has increased its price target for Eaton to $414, maintaining an Outperform rating, and noted that growth is expected to expand beyond data centers. Similarly, BNP Paribas Exane reiterated its Outperform rating with a price target of $413, citing potential growth from shifts in customer capital expenditure toward AI data center equipment. Daiwa Securities has initiated coverage with an Outperform rating and a $390 price target, pointing to growth drivers such as investments in data centers and electricity grid infrastructure. KeyBanc also reiterated its Overweight rating and a $410 price target after meetings with Eaton’s financial leadership, maintaining a positive outlook. Meanwhile, Rothschild Redburn initiated coverage with a Neutral rating and a $336 price target, acknowledging Eaton’s strategic focus on power management and its alignment with major industry trends. These developments reflect a broad consensus among analysts on Eaton’s potential for growth in the evolving energy markets.

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