Several Analyst Firms Cut Rockwell Automation Price Target After Q1 Results

Analysts lowered the price target for Rockwell Automation ROK after the Q1 results.
JPMorgan analyst Stephen Tusa lowered the price target to $220 from $225 and kept an Underweight rating.
Tusa sees an "expensive stock getting too much credit for its realistic growth potential."
He expects consensus estimate cuts and a deceleration in Rockwell's growth as further catalysts to normalization in the multiple.
Credit Suisse analyst John Walsh reduced the price target to $318 (an upside of 13%) from $343 and maintained a Neutral rating on the shares.
Walsh mentions that orders of $2.5 billion+ were better than expected, but FY orders guidance of $9 billion+ implies deceleration.
The analyst sees potential upside to EPS consensus estimates in FY23 but does not see a catalyst for the stock given concerns around rising interest rates.
Citi analyst Andrew Kaplowitz lowered the price target to $381 from $400 and maintained a Buy rating on the shares.
The analyst thinks the "solid backlog and strong order momentum" in Q1 highlights the growing demand/adoption of automation and digital transformation across most Rockwell's end markets.
Goldman Sachs analyst Joe Ritchie decreased the price target to $294 from $326 and maintained a Sell rating on the shares.
The analyst says that the company's Q1 earnings beat was driven entirely by Intelligent Devices, with segment EBIT rising 30% relative to consensus.
Ritchie adds, however, that while he was encouraged by the continued strength in order trends, the 700bp decline in Software & Control margins was "unexpected."
Yesterday, the company reported first-quarter sales growth of 18.7% year-over-year to $1.86 billion and +16.8% on an organic basis, beating the consensus of $1.82 billion.
Quarterly orders were up by 40% Y/Y to $2.5 billion. Adjusted EPS was $2.14, beating the consensus of $1.92.
Margins: Gross margin contracted by 100 bps to 40.3%; Total segment operating margin declined by 70 bps to 19.1%.
For the quarter, Rockwell's cash used for operating activities totaled $12 million, compared to cash generated $346.5 million a year ago.
FY22 Outlook: The company reaffirmed its prior guidance, expecting sales growth of 16% - 19% reported and 14%-17% organic. Adjusted EPS of $10.50 - $11.10 (consensus $10.76).
Price Action: ROK shares are trading lower by 1.99% at $281.26 on the last check Friday.

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