On Thursday, Jefferies updated its outlook on Rockwell Automation (NYSE:ROK) shares, increasing the price target to $300 from $280, while keeping a Hold rating on the stock.
The firm anticipates a potential downward revision in the company's earnings for 2024, citing an overly optimistic expected fourth-quarter order influx of approximately $2.4 billion, which may not align with year-to-date results and the current projection of subdued industrial capital expenditure through the end of the calendar year.
The updated financial model from Jefferies suggests that Rockwell Automation's full-year earnings might fall slightly short of the company's guidance, projecting earnings of $9.93 per share compared to the guidance range of $10.00 to $11.00 per share. This estimate is based on an organic growth forecast at the lower end of expectations and a margin performance that may not meet previous predictions.
Despite the conservative outlook for the near term, Jefferies suggests a more optimistic view could emerge following a revision of the company's 2024 earnings. The firm anticipates a recovery in capital spending in calendar year 2025 (CY25), as uncertainties in the market begin to clear. This potential for improvement in the future contributes to the firm's maintained Hold rating on the stock.
The appointment of Christian Rothe as Chief Financial Officer (CFO) of Rockwell Automation also received a positive nod from Jefferies. The firm recognizes Rothe's track record of achieving solid operating results during his tenure at GGG, implying confidence in his capability to contribute positively to Rockwell Automation's financial management.
In other recent news, Rockwell Automation has made significant leadership changes with the appointment of Christian Rothe as Senior Vice President and Chief Financial Officer.
This move follows the retirement of Nick Gangestad. Rothe, with his extensive experience in the manufacturing industry, will focus on driving growth and expanding margins.
On the financial front, Rockwell Automation saw a downward revision in its fiscal year 2024 guidance. Analyst firms have responded with varied ratings; Oppenheimer reduced its price target to $295 but maintained an Outperform rating, while TD Cowen retained its Sell rating, expressing caution about the company's $10 billion revenue goal. Loop Capital also adjusted its price target due to anticipated lower earnings for fiscal years 2024 and 2025.
Further, Redburn-Atlantic initiated coverage of Rockwell Automation with a Neutral rating, suggesting that anticipated growth is largely factored into existing market valuations.
In addition, Oklahoma's 1st congressional district representative, Kevin Hern, made investments in Rockwell Automation through dividend reinvestment, indicating a diversified investment strategy.
These recent developments provide investors with a comprehensive picture of Rockwell Automation's current landscape. As the company navigates its leadership transition and addresses financial targets, the market will continue to monitor its performance closely.
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