EU and US could reach trade deal this weekend - Reuters
On Monday, UBS analyst Amit Mehrotra shared insights into the US Electrical Equipment and Multi-Industry sector, indicating a more positive outlook than anticipated despite geopolitical tensions. The report, which summarized conversations with various diversified industrial companies, suggested that end-user demand remains steady, with some firms like Carrier Global Corp . (NYSE:CARR) experiencing a strong March. According to InvestingPro data, this sector’s resilience is reflected in companies like Johnson Controls , which has demonstrated strong momentum with a 28.7% return over the past year.
Fastenal Company (NASDAQ:FAST) reported that its February sales saw a modest increase throughout the month. This uptick was supported by encouraging feedback from Regional Vice Presidents regarding business conditions. These executives oversee a significant number of district and general managers, providing a broad view of the company’s performance.
Mehrotra’s analysis also forecasts positive order growth for Parker-Hannifin Corporation (NYSE:PH), Dover Corporation (NYSE:DOV), and Johnson Controls International plc (NYSE:JCI). Parker-Hannifin and Dover are expected to continue their recent positive trends, supported by Purchasing Managers’ Index (PMI) readings above 50, indicating expansion in the manufacturing sector. Johnson Controls, with its impressive $53.4 billion market cap and 7.9% revenue growth in the last twelve months, is anticipated to benefit from the long-cycle nature of its business following recent divestitures. InvestingPro analysis reveals that JCI has maintained dividend payments for 55 consecutive years, showcasing its financial stability. Subscribers can access 6 additional exclusive ProTips and comprehensive financial metrics through the platform’s detailed research reports.
The report’s optimistic tone suggests that despite external pressures, there is resilience within the US Electrical Equipment and Multi-Industry sector. Companies have been able to maintain or grow orders, with some even exceeding expectations in the current economic climate.
Investors and industry observers may find this update reassuring, as it provides a snapshot of the sector’s health going into the quarter’s end. The positive feedback from companies like Carrier Global and Fastenal, along with growth projections for Parker-Hannifin, Dover, and Johnson Controls, could indicate underlying strength in the industrial market.
In other recent news, Johnson Controls has announced the appointment of Joakim Weidemanis as its new Chief Executive Officer, effective March 12, 2025. This leadership change follows the resignation of Weidemanis from the board of Assa Abloy (OTC:ASAZY) to join Johnson Controls. UBS has upgraded Johnson Controls’ stock rating from Neutral to Buy, citing confidence in Weidemanis’ leadership and setting a new price target of $103, indicating a potential 20% upside. The firm anticipates a significant improvement in the company’s earnings per share by fiscal year 2028, projecting a compound annual growth rate of approximately 20% from the forecasted EPS for fiscal year 2025.
Conversely, Melius has downgraded Johnson Controls’ stock from Buy to Hold, adjusting the price target to $95. This downgrade reflects concerns over future price-to-earnings ratios amidst broader apprehensions about the sustainability of capital expenditure trends, particularly in the AI sector. Despite these concerns, Melius does not foresee issues with Johnson Controls’ earnings results for 2025 or 2026. The firm suggests a strategic pivot towards lower-valuation industrial stocks with less exposure to the recent AI investment surge. These developments highlight a divergence in analyst perspectives on Johnson Controls’ future performance.
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