SBNY - General Electric Honeywell are safest industrial stocks into Q1 earnings: Wells Fargo
2023-04-14 13:21:41 ET
General Electric ( NYSE: GE ) and Honeywell International ( NASDAQ: HON ) are the best defensive stocks – or ones that typically are seen as safe holdings amid market turbulence – going into the Q1 earnings season, analysts at Wells Fargo Securities said. They also revised their price targets for many manufacturers they cover.
“GE ( GE ) is the purest defensive exposure in our group given late/long cycle orientation and heavy profit weighting to aerospace. Honeywell ( HON ) is mixed, but aerospace is attractive and the stock typically does well in defensive positioning environments,” Joseph O’Dea, analyst at Wells Fargo, said in an April 13 report. “Key for the quarter, in our view, is no execution missteps to distract from positioning appeal.”
Several recent indicators of U.S. manufacturing activity have been cause for concern. The Institute for Supply Management this month reported that its manufacturing index was less than 50 – the threshold for growth or a decline – for the fifth straight month in March. Last month’s reading of 46.3 was the lowest since May 2020, when pandemic lockdowns were wreaking havoc on the global economy. A similar U.S. manufacturing index tallied by S&P Global hit 49.2 in March, also less than 50 for the fifth month in a row.
An emerging risk for makers of construction equipment and heavy machinery is the tightening of credit conditions for regional banks in the wake of last month’s collapse of Silicon Valley Bank ( OTC:SIVBQ ) and Signature Bank ( OTC:SBNY ). Investors will keep an eye on the trends for product orders and other indicators of demand, Wells Fargo said.
“We expect solid results with improving supply chain contributing to potential upside risk on both more backlog burn driving higher revenue and improved price/cost driving better margins,” according to Wells Fargo. “However, with credit tightening a broad-based risk to our group, we see diminished upside risk to stocks from earnings beats and positive management tone. Instead, we anticipate a preference to wait and see how demand plays out.”
| Wells Fargo revisions to price targets for electrical equipment and multi-industry, April 13 |
| Company name (Ticker) |
| New |
| Old |
| 3M Co. ( NYSE: MMM ) |
| $110.00 |
| $115.00 |
| Acuity Brands Inc. ( NYSE: AYI ) |
| $180.00 |
| No change |
| Allegion PLC ( NYSE: ALLE ) |
| $116.00 |
| $130.00 |
| Carrier Global Corp. ( NYSE: CARR ) |
| $46.00 |
| $47.00 |
| Dover Corp. ( NYSE: DOV ) |
| $155.00 |
| $157.00 |
| Eaton Corporation plc ( NYSE: ETN ) |
| $170.00 |
| $180.00 |
| Emerson Electric Co. ( NYSE: EMR ) |
| $90.00 |
| No change |
| Fortive Corp. ( NYSE: FTV ) |
| $68.00 |
| $70.00 |
| General Electric Co. ( GE ) |
| $100.00 |
| No change |
| Honeywell International Inc. ( HON ) |
| $205.00 |
| $210.00 |
| Hubbell Inc. ( NYSE: HUBB ) |
| $221.00 |
| $225.00 |
| Illinois Tool Works Inc. ( NYSE: ITW ) |
| $227.00 |
| $250.00 |
| Ingersoll Rand Inc. ( NYSE: IR ) |
| $61.00 |
| $62.00 |
| Johnson Controls International plc ( NYSE: JCI ) |
| $65.00 |
| $69.00 |
| Lennox International Inc. ( NYSE: LII ) |
| $283.00 |
| $300.00 |
| Otis Worldwide Corp. ( NYSE: OTIS ) |
| $75.00 |
| $82.00 |
| Parker-Hannifin Corp. ( NYSE: PH ) |
| $366.00 |
| $385.00 |
| Rockwell Automation Inc. ( NYSE: ROK ) |
| $238.00 |
| $245.00 |
| Stanley Black & Decker Inc. ( NYSE: SWK ) |
| $85.00 |
| $105.00 |
| Trane Technologies PLC ( NYSE: TT ) |
| $163.00 |
| $176.00 |
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General Electric, Honeywell are safest industrial stocks into Q1 earnings: Wells Fargo