Eaton (ETN +2.3%) is higher after Goldman Sachs upgrades shares to Buy from Neutral with an $88 price target, citing ETN management's indicating solid organic growth across most of the company's portfolio.
Goldman views ETN's margins as potentially conservative and believes the company can drive most of its targeted margin improvement through self-help.
Capital deployment could provide upside, the firm says, with ETN's net leverage at less than 2x and more than $5B of free cash flow estimated for 2018 and 2019.
Goldman also models $800M in buybacks each year in 2018-19, consistent with prior years, but it thinks ETN could put an additional $2.2B to work without adding leverage.
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