EMR - Emerson Electric upgraded yo Overweight at Morgan Stanley amid NATI deal win-win bid outcome

March, 21 2023 06:36 AM Emerson Electric Company

2023-03-21 06:36:25 ET

Morgan Stanley upgraded Emerson Electric ( NYSE: EMR ) to overweight (PT raised to $96 from $95) from equal-weight amid its bid for National Instruments which is eyed as a "win-win" for Emerson whether or not its bid for the computer-software provider is accepted.
In mid-January, the company announced a bid to acquire National Instruments for $53/share at an implied enterprise value of $7.6B.
Analyst Joshua Pokrzywinski says co. shares are down 16% since the bid, and the resolution of the deal will mean either management lands an accretive deal or establishes its discipline.
He further adds that acquisition of National Instruments would be a debatable synergy case given the lack of overlap, but adds de-rated valuation, fundamental tailwinds and advantaged M&A position would limit downside.
It expects orders to accelerate as peers potentially decelerate, sees improving fundamentals, with LNG and hydrogen together driving more than 2% uplift to revenue through 2030.
In early March, National Instruments decided that Fortive and Keysight Technologies are poised to outbid Emerson Electric in its $7B offer; the three companies' buyout offers were enough to qualify for a second round of bids.

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