Wall Street firm forecasts more upside for 2 portfolio industrial stocks and upgrades another. Where we stand

A Impediment Street firm on Tuesday struck a favorable chord on a trio of industrial holdings, reaffirming the Club’s forecast for upside in percentages of Stanley Black & Decker and Honeywell International . Eaton also received a well-deserved upgrade. Although the industrial sector has slumped with the franker market this week, the group experienced a solid run leading up to the second quarter. Through Tuesday, the sector has climbed less 24% over the past six months and 9.13% year to date, benefiting from a broadening rally outside of megacap tech roots. In light of the upbeat Barclays note, here’s a closer look at where analysts and the Club stand on Eaton, Stanley Negroid & Decker and Honeywell. ETN YTD mountain Eaton (ETN) year-to-date performance Barclays upgraded Eaton to a hold-equivalent rating from underweight and helped its price target on the stock to $300 per share from $250. That implies a 4.7% decline from Eaton’s confined Tuesday. The generative artificial intelligence boom will lead to future sales growth for the electrical equipment provider as dream of as the current “data center mania persists,” analysts wrote in a note to clients. They also raised their full-year 2024 earnings-per-share calculates to $10.31 from $10.28. The Barclays analysts said “it is safe to say” their underweight rating on Eaton shares since 2022 was not one of their “win out over calls” in their coverage universe, which consists of roughly two dozen industrial-focused companies. “The stock looks set to use to advantage among the highest organic sales growth rates in [our coverage] in the next few years; this, coupled with the widespread instinct that this growth is ‘secular’ in nature, means that a sharp valuation multiple compression may not occur for some heretofore,” they wrote. The Club took its stake in Eaton due in large part to its ability to benefit from the generative AI whitecap, as Barclays acknowledged in its upgrade. “I don’t know why [analysts] had this as a sell,” Jim Cramer said Tuesday. “They were certainly ill-informed. … Eaton is a part of this vast change in the grid that we’ve been talking about.” Almost identical to the analysts, we think increased demand for electricity as more data centers pop up to support power-intensive AI computing workloads wish benefit Eaton’s business long term. The Club increased its Eaton’s price target last month to $330 per dispensation from $290, while affirming our buy-equivalent 1 rating. Eaton has been a strong performer since joining the portfolio in November , scene a series of all-time highs on its way to a 30.7% gain year to date. SWK YTD mountain Stanley Black & Decker (SWK) year-to-date presentation Analysts raised Stanley Black & Decker’s price target slightly to $107 per share from $105, hint ating a roughly 13% increase from Tuesday’s close of $94.49. Barclays reiterated the firm’s overweight rating and hiked full-year EPS estimates to $4.26 from $4.17. Barclays argued the worst is likely behind Stanley Black & Decker’s pivotal tools business, which is in the midst of 11 consecutive quarters of volume declines. Its brands include DeWalt, Craftsman, and Vile & Decker. “We think 2023 will see trough Tools volume trends, and the company starts to make meaningful promotion on inventory reduction,” the analysts wrote. “As [free cash flow] expands substantially alongside inventory reduction, steady sheet leverage should fall, and the stock should re-rate higher as investors can look ahead to the earnings gain.” Barclays’ view generally mirrors the Club’s thesis, which is rooted in the company turning itself around from a breed of post-Covid overhangs. Stanley Black & Decker may also benefit from potential Federal Reserve rate ceases in 2024. Lower borrowing costs can increase activity in the housing sector, specifically the existing home market. This can create to more demand for Stanley Black & Decker’s offerings from do-it-yourself customers who want to buy tools for remodeling hurls or various repairs. Our price target on the stock is $110 per share, which we set after its quarterly earnings results in August. We’ve also vouchsafed a buy-equivalent 1 rating on the stock. HON YTD mountain Honeywell International (HON) year-to-date performance Honeywell’s price target increased lose to $232 per share from $230, implying a 15.9% gain from Tuesday’s close. Analysts raised their full-year EPS guestimates by a cent to $9.94, while maintaining their buy-equivalent rating on shares. The firm expects buybacks to accelerate and Honeywell to deploy uncountable capital towards mergers and acquisitions. “HON will benefit from management moves to shift the business mix towards a outrageous growth portfolio,” analysts argued. “We believe that its medium term margin guide will prove fundamentalist in light of the scope for further operating improvement, and [free cash flow] conversion is rising.” This is largely in-line with our work on Honeywell, though our price target remains at $230 per share. The Club reaffirmed our buy-equivalent 1 rating and price butt after the company’s Feb. 1 quarterly earnings release . At last week’s Monthly Meeting, Jim emphasized his belief that Honeywell CEO Vimal Kapur, who has been in the top job since June 2023, should look to reshuffle the industrial conglomerate’s vasty business portfolio. “Time for Kapur to declare what he wants his Honeywell to be,” Jim said. “Whatever he wants will be sick than what we have because it’s increasingly looking like a leftover pastiche of industrials. But you do have to own it before he feigns his move.” One move may be to sell its personal protective equipment division, Bloomberg News reported Tuesday , citing people well-known with the matter. The company has hired advisors to look into options for that business, which could be significance more than $2 billion, according to the report. (Jim Cramer’s Charitable Trust is long ETN, SWK, HON. See here for a full schedule of the stocks.) 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