ITW - Illinois Tool Works is short-term sell idea at Deutsche Bank

Illinois Tool Works ( NYSE: ITW ) was described as a short-term sell idea by analysts at Deutsche Bank amid their doubts about the company’s operating margin.

Illinois Tool’s 2022 EPS guidance of $9- $9.40 requires an “aggressive” increase in its operating margin of 300 basis points during the second half of this year, according to the bank. The stock also is trading at a “massive 35% premium” to the industry median, compared with its five-year average premium of 16%, Deutsche Bank said.

“We stand at $8.90 for the full year, and see risk of a guidance cut this quarter,” Nicole DeBlase, analyst at Deutsche Bank, said in the recommendation.

The bank in August had downgraded Illinois Tool to a Sell from Hold on the company’s earnings multiple compared with peers.

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