SIEGY - ABB: Living Well In The Industrial Sweet Spots (Rating Upgrade)
2024-06-06 02:22:39 ET
Summary
- ABB continues to see strong demand for electrification gear, and between long lead times and growing demand from data centers, grid modernization, and decarbonization, this is likely to continue.
- Both discrete and process automation markets are looking softer, but most short-cycle markets should be at or near their bottoms and the long-term outlook for automation demand is strong.
- A change at the top could represent some risk, as outgoing Bjorn Rosengren has done an excellent job, but the new CEO has deep experience at ABB.
- I believe ABB is shifting from margin improvement to growth as its primary focus, and markets like electrification, automation, and AI all offer new growth opportunities.
- ABB isn't conventionally cheap, but investor enthusiasm for electrification and a rebound in automation can support a bullish thesis.
Maybe the worst thing I can say about ABB ’s (ABBNY) performance since my last update on this leading player in electrification and automation is that purer-plays on the themes I love (an electrification super-cycle in particular) like Eaton ( ETN ) and Schneider ( OTCPK:SBGSY ) have done even better. I attribute this largely to those companies’ greater leverage to electrification and relatively lower exposure to temporarily weak automation and industrial end-markets, as other peers like Rockwell ( ROK ), Siemens ( OTCPK:SIEGY ), and YASKAWA ( OTCPK:YASKY ) have underperformed not only Eaton and Schneider, but also ABB....
ABB: Living Well In The Industrial Sweet Spots (Rating Upgrade)