Market Overview

Deutsche Bank Says Illinois Tool Works Could Become The Next 3M

Share:
Related ITW
5 Biggest Price Target Changes For Tuesday
Benzinga's Top Upgrades, Downgrades For January 4, 2018
Chelsea Counsel Co Buys Harris Corp, EOG Resources Inc, Corning Inc, Sells Emerson Electric Co, ... (GuruFocus)
Related MMM
Benzinga's Top Upgrades, Downgrades For January 23, 2018
The Week Ahead: IPOs, Earnings, And FDA Actions Provide Catalysts
UBS initiates ratings on industrial names (Seeking Alpha)

Deutsche Bank reiterated a Buy rating on Illinois Tool Works Inc. (NYSE: ITW) and a $102 price target.

Analyst John G. Inch believed “ITW is on a path to possibly become the next “3M” of the multi-industry space.”

Inch noted, “For years, similar to ITW, we believe 3M Co (NYSE: MMM) was perceived to be challenged by slow growth, high margins and a general unwillingness to shake up the portfolio. Since new management assumed control of 3M in early 2012, the company has implemented actions to improve returns while stepping up share repurchase. 3M’s shares have since outperformed multi-industry.”

“We view both 3M and ITW to be relatively comparable on a number of dimensions, including operational success and brand management. ITW’s implementation of its Enterprise Initiatives appears to have profoundly and positively changed the organization in terms of streamlining operations, boosting profitability and stepping-up cash returned to shareholder,” according to Inch.

The analyst report concluded, “If ITW were to trade at 3M’s forward valuation of just over 19x, ITW’s shares could be worth $112, representing 20 percent upside. ITW could also realize a valuation of $112 if we were to add back intangible amortization (per Danaher precedent) and reduce the target multiple to 18x,”

The $102 price target was derived by applying a 17.5x P/E to the 2016 EPS estimate of $5.80.

Illinois Tool Works recently traded at $93.46, up 0.86 percent.

Latest Ratings for ITW

DateFirmActionFromTo
Jan 2018BMO CapitalDowngradesOutperformMarket Perform
Dec 2017Bank of AmericaInitiates Coverage OnBuy
Oct 2017Morgan StanleyMaintainsEqual-Weight

View More Analyst Ratings for ITW
View the Latest Analyst Ratings

Posted-In: Deutsche Bank John G. InchAnalyst Color Reiteration Analyst Ratings

 

Related Articles (ITW + MMM)

View Comments and Join the Discussion!