Eaton Trading At A Discount To Its Peers, Argus Upgrades To Buy

Argus upgraded Eaton Corporation, PLC Ordinary Shares ETN to Buy from Hold, suggesting a $75 price target. The analysts maintained their 2016 EPS estimate of $4.30, and raised the 2017 EPS estimate to $4.58 from $4.55, as they expect a stable dollar and a corporate restructuring to improve profitability.

According to the analysts, the company faces near-term challenges from the slumping price of oil, as energy customers cut capex, as well as from slower industrial spending and unfavorable currency translation.

"But looking out to 2017, we expect Eaton to benefit from restructuring actions and a weaker dollar, and to return to EPS growth," the analysts said.

They also noted Eaton shares are trading at 14.4-times projected 2017 earnings, near the midpoint of the historical range of 9-20, and at a modest discount compared to its peer group.