Rockwell Automation To See Wholesome Orders Ducking The Demand Destruction Development, Says Morgan Stanley

• Morgan Stanley analyst Joshua Pokrzywinski reiterated an Obese score on the shares of Rockwell Automation Inc (NYSE: ROK) and raised the price target from $284 to $335.

• Close to-shoring stays one of many extra topical market themes, however ROK’s provide chain points have held again efficiency as much as this quarter, mentioned the analyst.

• With a big backlog trying much less prone to be canceled, and resilient near-term order charges, the analyst sees a big upside to consensus over the following two years and expects restricted cyclical a number of compression.

• Total, the analyst continues to see ROK’s backlog and structural adjustments in buyer habits collectively offering the visibility to develop via an IP slowdown.

• The analyst additional expects automation content material in capex spending to develop as labor provide and know-how adoption help the willingness and talent to automate and customise product classes traditionally deemed too costly.

• Additionally Learn: Rockwell Automation Q1 Earnings Top Estimates; Boosts FY23 Forecast

• ROK famous each orders and backlog had been up sequentially, an indication of continued manufacturing capex/ nearshoring demand, the analyst mentioned.

• Inside FY23 income steering, ROK expects all of its markets (i.e. Discrete, Course of, and Hybrid) to develop low-teens, representing an enchancment in Discrete and Hybrid vs. prior steering, cited the analyst.

• The analyst mentioned there’s a continued conviction in a generational capex cycle regardless of a slowing macro setting and uneven provide chain.

• The analyst expects orders to stay wholesome as different verticals, each shopper and different short-cycle industrial markets, deal with demand destruction from rising charges and chronic inflation.

• Value Motion: ROK shares are buying and selling increased by 0.27% at $282.64 on the final examine Friday.

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