On Friday, Bernstein analysts maintained their Outperform rating on Eaton Corporation (NYSE:ETN) with a steady price target of $385.00.
The firm's analysts emphasized the increasing importance of efficient power management as a key factor in value creation and product development for Original Equipment Manufacturers (OEMs), highlighting the growth in electricity demand and the ongoing energy transition.
Eaton's presentation at a recent event showcased their focus on systems that manage power across various domains, including industrial, utility, and residential. The company's systems-based selling approach, featuring products like microgrids, AbleEdge, and BrightLayer, as well as a new battery pack offering, was particularly noted for its potential to capture significant value.
The analysts pointed out Eaton's turnkey Engineering, Procurement, and Construction (EPC) capabilities for microgrids, which they identified as a massive opportunity for value capture. Additionally, Eaton's residential energy management solutions and factory automation, which could make operations 10-20% more energy-intensive, were seen as expanding the company's selling suite through electrical infrastructure upgrades.
Bernstein arrived at Eaton's price target by applying a 30x Price-to-Earnings (P/E) multiple on their 2030 earnings per share (EPS) estimate. By discounting this back, they arrived at a $385 price target, which implies a 31x P/E on their 2025 EPS estimate. The analysts noted a slight increase in the price target, reflecting their updated EPS projections for 2025.
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