On Thursday, CFRA analysts changed the rating for Ingersoll-Rand (NYSE:IR) stock from Sell to Hold and increased the price target to $95 from $90.
"We upgrade our rating on IR shares to Hold from Sell as the shares have retreated toward reasonable levels, in our view," analysts at the firm said.
The new price target is based on a multiple of 24.5 times the firm's projected earnings per share (EPS) for 2026, which is $3.87. The EPS estimates for 2024 and 2025 remain unchanged and are consistent with previous forecasts.
CFRA notes that the valuation aligns with Ingersoll-Rand's historical long-term forward average. The upgrade reflects an expectation for organic sales growth to accelerate, driven by an increase in capital equipment spending. This anticipated growth comes after a period of modest contraction in the industrial economy, which the analyst believes is set for recovery.
The CFRA analyst's outlook suggests confidence in the industrial sector's rebound, bolstered by the easing of monetary policy. The firm points out that the uncertainty regarding additional rate cuts in 2025 and the outcome of the upcoming election had previously led customers to delay capital investments. However, the forecasted uptick in spending is expected to support Ingersoll-Rand's performance.
While tariffs remain a concern for the company, CFRA believes that Ingersoll-Rand's supply chain strategy, which focuses on regional production for local markets, will help mitigate potential impacts from trade tariffs. The strategy is designed to reduce the company's vulnerability to global supply chain disruptions and tariff impositions.
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