UBS Maintains a 'Neutral' on Eaton Corporation (NYSE: ETN); Comments on ETN/CBE Acquisition

UBS maintains a 'Neutral' on Eaton Corporation (NYSE: ETN) price target of $40.00 (from $53.00).

Analyst, Jason Feldman, said, "Over the last decade or so, ETN has materially improved its portfolio mix with a shift towards less cyclical, later cycle businesses, with a more diverse geographic footprint...Despite these changes, ETN still trades far more like a “machinery” than an electrical equipment
/ multi-industry stock. CBE and other EE/MI stocks have traded at a substantial PE premium to ETN during “normal” economic periods (e.g. excluding recessions where ETN trades at inflated multiples on depressed earnings)."

"But we remain tactically cautious given near-term risks including: (1) Macro uncertainty and associated EPS risk; (2) possibility of an equity offering similar to what followed the last sizeable acquisition in ’08; and (3) near-term (2013) EPS dilution from the deal. Downside could be limited by a high dividend yield (~4%)."

For an analyst ratings summary and ratings history on Eaton Corporation click here. For more ratings news on Eaton Corporation click here.

Shares of Eaton Corporation closed at $37.78 yesterday.

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