Bank of America likes this industrial turnaround story

CNBC

16-07-2025

Rockwell Automation could still be an attractive turnaround story for investors, even after its latest run, according to Bank of America. BofA upgraded the industrial automation stock to buy from neutral in a Wednesday note, raising its price target 14%, to $410 per share from $360. BofA's forecast implies about 18% upside from Tuesday's $346.49 close. Rockwell helps businesses update their operations while improving productivity, through what are called both "smart manufacturing" and "process solutions." Analyst Andrew Obin said that Rockwell is "starting to see the impact of its operational turnaround strategy," adding that the company's Logix platform is a strong catalyst for growth. Some of the turnaround involves roughly $250 million worth of cost cutting in 2025, which the analyst said the company is hoping to surpass. "We view ROK as a beneficiary from reshoring of U.S. manufacturing," Obin wrote in a 13-page report. "ROK has a strong position in the U.S. and international automation markets." "We are gaining conviction in the company's ability to execute and see both secular and cyclical tailwinds, both of which will drive better earnings power versus prior cycles," he continued. The analyst raised his earnings estimate for the fiscal fourth quarter ending in September to $3.17 per share, above the Wall Street consensus of $2.86, he said. Obin also lifted his fiscal 2026 earnings estimate to $13, "well above $11.43 consensus and growing +29% y/y," he said, noting Rockwell's efforts to expand margins are in "early innings and accelerating." "We model faster margin expansion in FY26E vs. FY25E as a reflection of volume leverage," the analyst said. "The company has telegraphed pricing trending above expectations." Rockwell shares have soared 54% in the past three months.