JPMorgan Upgrades ABB To Neutral Following 'Good Q1'

ABB Ltd (ADR) ABB reported robust 1Q results, with upside on base orders and adjusted EBITDA in line with the consensus.

JPMorgan’s Andreas Willi upgraded the rating on the company from Underweight to Neutral, with a price target of SF17.50.

Willi mentioned that the reasons for the Underweight rating had played out, and that ABB continues to execute well, while its cost savings were expected to ramp through 2016.

1Q Results

“The quarter saw an increased benefit from the white color productivity program and margins in Discrete Automation, which surprised negatively last year, improved sequentially and may have seen the trough,” Willis stated.

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Base order trends improved during the quarter, while margin execution continued to be good. Margins at discrete automation had declined sharply in 2015 and appear to have bottomed, given that they rose sequentially in 1Q, as compared to 4Q.

“we continue to see the valuation a being full but with a good dividend support (3.8 percent) and good balance sheet, the stock had re-rated last year on falling earnings,” Willis added.