IEX - IMI Plc Underappreciated For Its Short-Cycle Leverage And Self-Help Potential
- Even with above-average exposure to weak power-gen and oil/gas markets, IMI outperformed most industrial conglomerates in 1H'20, with fairly broad underlying outperformance.
- Precision offers the most near-term upside, with recoveries in factory automation and commercial vehicles, as well as investment/M&A opportunities in food/bev and pharma.
- Critical's exposure to power gen and oil/gas is problematic given weak capex outlooks in those markets, but management has identified a significant piece of the business (20%-30%) to divest.
- IMI's above-average exposure to power and oil/gas warrants a discount, but I believe the implied discount is now too high and IMI offers relatively attractive returns within the industrial sector.
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IMI Plc Underappreciated For Its Short-Cycle Leverage And Self-Help Potential