JP Morgan Upgraded Eaton, Says Company Will Enjoy Organic & EPS Growth Amid Sluggish Electrical Equipment Industry Fundaments

JP Morgan analyst C. Stephen Tusa upgraded Eaton Corp PLC ETN to Overweight from Neutral and raised the price target from $185 to $230.

The analyst is bullish on the company given its best-in-class growth after the recent 15% drawdown, and expects it to witness above-average growth and best earnings revisions led by strong end markets and a tight supply & demand scenario. 

Although the analyst sees several headwinds in the electrical equipment & multi-industry related to the cost of capital and weakening consumer sentiments, they believe some mega projects will positively impact over the coming three years and drive high-single-digit earnings growth.

The analyst sees organic growth of 4% in the base case and a decline of 4% in a recessionary environment, with an average organic growth of 4% and EPS growth of 9% for the next two years in electrical equipment & multi-industry.

The analyst notes that the companies with organic and EPS growth include Eaton.

Consequently, the analyst raised estimates for EPS to $8.90 (from $8.28 earlier), $9.95 (from $9.13) for FY24, and $11.16 (from $9.98) for FY25. 

Also Read: Eaton Invests In Texas & Wisconsin To Help Meet Surging Utility Demand

Price Action: ETN shares are trading higher by 1.20% at $205.61 on the last check Friday.