- Analysts lowered the price target for Rockwell Automation (NYSE:ROK) after the Q1 results.
- JPMorgan analyst Stephen Tusa lowered the price target to $220 from $225 and kept an Underweight rating.
- Tusa sees an "expensive stock getting too much credit for its realistic growth potential."
- He expects consensus estimate cuts and a deceleration in Rockwell's growth as further catalysts to normalization in the multiple.
- Credit Suisse analyst John Walsh reduced the price target to $318 (an upside of 13%) from $343 and maintained a Neutral rating on the shares.
- Walsh mentions that orders of $2.5 billion+ were better than expected, but FY orders guidance of $9 billion+ implies deceleration.
- The analyst sees potential upside to EPS consensus estimates in FY23 but does not see a catalyst for the stock given concerns around rising interest rates.
- Citi analyst Andrew Kaplowitz lowered the price target to $381 from $400 and maintained a Buy rating on the shares.
- The analyst thinks the "solid backlog and strong order momentum" in Q1 highlights the growing demand/adoption of automation and digital transformation across most Rockwell's end markets.
- Goldman Sachs analyst Joe Ritchie decreased the price target to $294 from $326 and maintained a Sell rating on the shares.
- The analyst says that the company's Q1 earnings beat was driven entirely by Intelligent Devices, with segment EBIT rising 30% relative to consensus.
- Ritchie adds, however, that while he was encouraged by the continued strength in order trends, the 700bp decline in Software & Control margins was "unexpected."
- Yesterday, the company reported first-quarter sales growth of 18.7% year-over-year to $1.86 billion and +16.8% on an organic basis, beating the consensus of $1.82 billion.
- Quarterly orders were up by 40% Y/Y to $2.5 billion. Adjusted EPS was $2.14, beating the consensus of $1.92.
- Margins: Gross margin contracted by 100 bps to 40.3%; Total segment operating margin declined by 70 bps to 19.1%.
- For the quarter, Rockwell's cash used for operating activities totaled $12 million, compared to cash generated $346.5 million a year ago.
- FY22 Outlook: The company reaffirmed its prior guidance, expecting sales growth of 16% - 19% reported and 14%-17% organic. Adjusted EPS of $10.50 - $11.10 (consensus $10.76).
- Price Action: ROK shares are trading lower by 1.99% at $281.26 on the last check Friday.
