A Few Positive Aspects Of Parker-Hannifin Already Priced In; Buckingham Downgrades

With shares of Parker-Hannifin Corp PH hitting Buckingham's price target, the firm said it's stepping to the sidelines.

The Analyst

Buckingham Research analyst Neil Frohnapple downgraded Parker-Hannifin from Buy to Neutral.

The Thesis

Parker-Hannifin stock has performed strongly over the past three months, advancing 16 percent compared to S&P 500's 9 percent increase and Eaton Corporation, PLC Ordinary Shares ETN's 5 percent gain, analyst Frohnapple said in a Friday note.

On a relative basis, the analyst said other multi-industrial companies such as Carlisle Companies, Inc. CSL currently offer more upside.

However, Frohnapple said his positive view on the fundamental outlook for Parker-Hannifin hasn't changed, with the analyst expecting favorable global PMI data, internal margin initiatives and CLARCOR Inc. CLC synergies to drive double-digit earnings growth over the next two years.

Buckingham still feels the company's 2018 guidance could prove conservative.

Given that the consensus earnings per share estimate is already above the upper end of the company's guidance range, the firm said a guidance raise is widely expected.

The firm said its best-case and worst-case scenarios for the company's shares are $225 and $175, respectively.