The potential EPS upside of U.S. tax reform should reach double digits for the four companies, while Eaton (NYSE:ETN) - already at a group-low ~10% global effective tax rate - should see only minimal upside, according to Winoker, who notes that tax deductibility of capex investment also would spark spending in the U.S.
Bernstein's covered companies derive between 10% (3M) and 60%-plus (Rockwell Automation (NYSE:ROK)) of revenues from customers’ capex spending, so the impact could be meaningful; the firm rates Allegion (NYSE:ALLE), DHR, Dover (NYSE:DOV), FTV, Honeywell (NYSE:HON), Ingersoll-Rand (NYSE:IR), Johnson Controls (NYSE:JCI) and Pentair (NYSE:PNR) at Outperform, with EMR, ETN, General Electric (NYSE:GE), Idex (NYSE:IEX), MMM and ROK at Market Perform.
3M (MMM +0.3%) is marginally higher on the heels of an upgrade to Sector Perform from Underperform at RBC Capital Markets due to a recent drop in the stock making its risk/reward profile more balanced.
The firm says health care exposure could hurt 3M due to possible new Trump initiatives, but it's raising its price target on shares to $171 from $155.
Griffin Capital Essential Asset REIT II has acquired 3M's (NYSE:MMM) DeKalb, Illinois distribution facility for $69.4M from Park 88 Group LLC.
It's a 978K sq ft distribution warehouse situated on a 49.71-acre site that was leased to 3M in August 2016 for 122 months.
"We are excited to acquire a new, state-of-the-art, Class-A logistics facility that serves as a primary distribution center for 3M. Our acquisition of this property reinforces our REIT's focus on driving shareholder value by investing in income-generating properties leased to well-established corporate tenants on a long term basis," said Shawn Carstens, VP Acquisitions.
3M (NYSE:MMM) is upgraded to Overweight from Equal Weight and a $194 price target at Barclays, part of the firm's more optimistic outlook in the U.S. multi-industry sector that prompts several stock upgrades.
Now is an attractive entry point for the overall group, Barclays believes, based on a view that the negative earnings revision cycle is nearing an end, greater visibility on key end-markets - particularly non-residential construction and general capital spending - and a recovery in emerging markets; $50-plus oil and potential M&A activity helps too, the firm says.
Barclays says 3M is the largest emerging market exposed name it covers (at 35% of sales), and it believes an emerging market recovery is taking place, particularly in places where 3M has been hit hard, notably Brazil; also, the recent rally in emerging market currencies will help 3M in an outsized manner.
In addition to 3M, Barclays upgrades WABCO Holdings (NYSE:WBC), ITT Industries (NYSE:ITT), Rexnord (NYSE:RXN) and Rockwell Automation (NYSE:ROK) to Overweight from Equal Weight; however, the firm downgrades Actuant (NYSE:ATU) and Terex (NYSE:TEX) to Underweight from Equal Weight.