Eaton Corporation plc (ETN)

From ClearBridge Financial

"One secular consumer trend we are increasingly investing in is electric vehicles (EVs). In addition to owning Aptiv and NXP, leading component suppliers for EVs, we initiated a new position in the second quarter in Eaton, a global manufacturer of electrical, power management and hydraulics components and equipment. Eaton is a critical player in supporting the increasing electrification of the global economy with opportunities in areas ranging from utility generation and distribution infrastructure to EV charging stations, solar power systems and electricity supply for data centers. Eaton has transformed itself over the last decade from a heavy industrial company into a diverse set of businesses levered to the more attractive secular growth of electrification. We anticipate this focus will allow electrical products’ revenue to grow in the mid-to-high single digits and support margin improvement."

Recent price target increases include:
Morgan Stanley: $180 - Overweight
Credit Suisse: $158 – Outperform
Wolf Research: $162 – Outperform
Evercore ISI: $168 – Outperform
Oppenheimer: $160 – Outperform
Average PT among 19 analysts: $161.89

From the conference call.....Eaton M&A, closing three deals. We're also making good progress toward the closure of the previously announced acquisition of Cobham Mission Systems as well as the divestiture of Hydraulics. And finally, we recently announced the agreement to acquire 50% of Jiangsu YiNeng meaning electric's busway business in China, an important part of our growth strategy for the Asia Pacific region. Having been quite busy on the M&A front, we thought it'd be helpful to provide a summary of these three recent deals. We covered Tripp Lite and Cobham Mission Systems acquisitions in some depth on the investor meetings, but each of these three deals here certainly advanced our strategic growth objectives and our electrical business.

First, Green Motion, based in Switzerland, it expands our capabilities in the electrical charging market where we expect to see significant growth over the next decade linked to energy transition. Their proven charter designs and advanced power management capabilities, billing software are valuable additions to our existing energy storage and power distribution offerings that support our view of everything as a grid. We also closed our previously announced investment in HuanYu. HuanYu is based in China and provides a strong portfolio of products that will open up significant growth opportunities in our business throughout Asia Pacific. They make cost-effective circuit breakers and contactors and that give us access to Tier 2 and Tier 3 markets in Asia Pacific.

And finally, last week we were pleased to announce the agreement to acquire 50% of Jiangsu YiNeng electric busway business in China. YiNeng's strong busway capabilities in China combined with YiNeng's broad portfolio of products will really position us well to participate in the high growth data center, industrial and high-end commercial segments and allowing us to pull through related electrical products. The HuanYu and YiNeng transactions, I'd also add, significantly expand our addressable market in China and in Asia Pacific, certainly allowing us to accelerate our growth rate in the region.