Emerson raised to Overweight at J.P. Morgan ahead of positive relative revision cycle

Emerson Electric (NYSE:EMR) +0.8% in Tuesday’s trading as J.P. Morgan upgraded the stock to Overweight from Neutral with a $107 price target, raised from $83, saying “visibility around positive earnings revisions is now as good as it’s has been the 2003-08 supercycle.”

“We see an attractive GARP setup as the dust settles on what should be close to a final round of mostly dilutive portfolio moves, but where we think the underlying quality of core value driving franchises is underappreciated,” JPM analysts Stephne Tusa wrote.

Emerson (EMR) is cyclically well positioned for an economic slowdown, Tusa says, with 65% of revenue related to maintenance, repair and overhaul: “All in, in a consensus economy, we see about ~$6/share in FCF in FY 2025, even assuming dilution from an AZPN buy in, on which the stock looks undervalued, while in a pullback, a cyclically well positioned portfolio with 65% MRO related revenues, self-help type deal accretion, and a still strong balance sheet should provide support.”