UPDATE: Goldman Sachs Upgrades Emerson (EMR) to Buy

January 19, 2021 5:02 AM EST
Get Alerts EMR Hot Sheet
Price: $93.71 -1.01%

Rating Summary:
    15 Buy, 18 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 11 | Down: 8 | New: 46
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(Updated - January 19, 2021 5:18 AM EST)

Goldman Sachs analyst Joe Ritchie upgraded Emerson (NYSE: EMR) from Neutral to Buy with a price target of $97.00 (from $89.00).

The analyst comments "We upgrade EMR to Buy from Neutral as we believe the company is set to benefit from improving oil & gas fundamentals, FactSet consensus estimates for 2021-2023 appear too low and the stock is inexpensive relative to coverage despite solid FCF, a healthy balance sheet and catalysts on the horizon. In our 2021 outlook, we highlighted that O&G could be the next long cycle end market (after commercial aero) to inflect. Since then, our Global Commodities Research team has pulled forward its Brent crude oil $65/bbl forecast to July 2021 (from December), with an expectation that this level will sustain through 2022. In this backdrop, we expect both sentiment and fundamentals to improve for oily industrials and we view EMR as one of the highest quality ways to invest in this theme in our space. While we expect the Energy complex to maintain stronger capital discipline in this O&G upcycle, our Global Energy team expects traditional capex to increase to $1.9bn/$12.2bn in 2021/2022 off of low levels (2020 was the lowest capex year in at least two decades). Historically, this has correlated well with Automation Solutions (AS) growth (GS: +6%/+5.5% in 2021/2022). Additionally, we think record levels of restructuring spend will likely drive strong adjusted EBIT margin expansion over the next two years."

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

Shares of Emerson closed at $82.75 yesterday.


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