In a report published Monday, Goldman Sachs analyst Joe Ritchie downgraded the rating on Illinois Tool Works ITW from Neutral to Sell, and lowered the price target from $71.00 to $69.00.
In the report, Goldman Sachs noted, “We downgrade ITW to Sell, relative to our coverage, with 0% upside vs. 7% for peers as we believe the multiple is rich and earnings upside is unlikely in 2013/2014 given slow growth across its portfolio. Specifically, we expect only +0.9%/+3.1% organic growth in 2013/2014 as strength in Auto OEM/Welding is offset by weakness in IP-driven segments. Moreover, while ITW is off to a good start with its enterprise initiatives, management expectations already assume a meaningful acceleration through the rest of the year ($0.05-0.06/qtr vs. $0.02 in 1Q) and into 2014, limiting upside. Lastly, at 14.6X 2014 EPS, ITW is trading at a 3% discount to coverage vs. a 10% discount historically in an ISM 50-55 environment.”
Illinois Tool Works closed on Friday at $68.43.
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