UBS maintains Buy on Eaton shares with $392 target

Wednesday, UBS analysts reaffirmed a Buy rating on Eaton Corporation (NYSE:ETN) shares, maintaining a $392.00 price target. The endorsement followed Eaton’s investor conference held in New York, where the company presented its financial outlook, which surpassed UBS expectations. Currently trading at $285.54, Eaton boasts a market capitalization of $113 billion and maintains strong financial health with an InvestingPro Overall Health Score of "GOOD."

Eaton anticipates an average revenue growth of 7.5% per annum from 2024 to 2030, slightly higher than UBS’s projection of 7%. Moreover, the company expects its earnings per share (EPS) to grow by more than 12% annually, compared to the 10% forecasted by UBS analysts. These projections suggest that Eaton’s EPS could exceed $21 per share by 2030, outpacing UBS’s estimate of $19.50. The company has demonstrated consistent growth, with current revenue at $24.9 billion and a solid track record of dividend payments for 55 consecutive years. Get deeper insights into Eaton’s growth potential with InvestingPro, which offers 12+ additional exclusive tips about this prominent electrical equipment player.

The company also highlighted its significant cash optionality, amounting to $21 billion over the forecast period, which could be leveraged for strategic opportunities. UBS analysts noted that this financial flexibility could potentially add an additional $2-$3 to EPS, under reasonable assumptions. This would imply an EPS compound annual growth rate (CAGR) of 14%.

UBS’s commentary underscored that despite recent market sell-offs, Eaton’s stock trades in line with the broader industrial sector. However, Eaton has the potential to deliver notably better EPS growth than the average industrial company. Even without considering further mergers and acquisitions, UBS analysts see a 15% CAGR return potential for Eaton through the estimated period of 2029. The firm’s stance remains positive as they maintain their Buy rating on the stock.

In other recent news, Eaton Corporation has announced a significant acquisition, agreeing to purchase Fibrebond Corporation for $1.4 billion. This strategic move is expected to enhance Eaton’s capabilities in the power management sector, particularly in data centers and utilities. The acquisition is projected to close in the third quarter of 2025, with Fibrebond expected to contribute approximately $378 million in revenue and $110 million in adjusted EBITDA for the year 2025. Eaton has indicated that the transaction will likely have a neutral impact on its earnings per share for the year of the acquisition.

On the analyst front, Bernstein has maintained an Outperform rating on Eaton, with a price target of $355, citing the company’s growth potential and strategic market positioning. Jefferies, while lowering its price target to $335, continues to hold a Buy rating, reflecting confidence in Eaton’s long-term financial trajectory. KeyBanc has upgraded Eaton’s stock to Overweight with a price target of $340, highlighting opportunities in the Electrification and Aerospace sectors as key drivers for future earnings growth.

These developments follow Eaton’s recent investor day, where the company’s leadership outlined ambitious targets, including a 6-9% annual revenue growth and significant margin expansion by 2030. Analysts have noted that Eaton’s current valuation and strategic initiatives present a compelling opportunity for investors. The company’s focus on expanding its market share and improving profit margins is expected to support its growth in the coming years.

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