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In a report published Wednesday, Nomura analyst Shannon O'Callaghan reiterated a Buy rating on
Rockwell AutomationROK, and raised the price target from $98.00 to $118.00.
In the report, Nomura noted, “Following a 2+ year deceleration in organic growth, which peaked at +28% in F1Q11 and bottomed at - 2% in F2Q13, Rockwell saw a reacceleration to +4% in F3Q13. While the company's guidance remains conservative, we think its decision to begin unleashing growth spending reveals greater confidence in the sustainability of a recovery in growth. Rockwell has lagged YTD (up 14% vs. EE-MI sector up 21%), but we see potential for outperformance from here via both EPS revisions and P/E expansion. We raise our 2013 EPS estimate from $5.50 to $5.70 (ex-non-operating pension). We raise our 2014 EPS estimate from $6.05 to $6.40 ex-non-operating pension ($6.18 on GAAP pension). We raise our target price to $118, based on ~19x our 2014 GAAP pension EPS estimate of $6.18 (vs. prior ~16x on our prior 2014 estimate of $6.05 ex-non-operating pension) on higher sector multiple, upward EPS revision, and organic reacceleration.”
Rockwell Automation closed on Tuesday at $95.63.
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