Investing.com -- Evercore ISI revised its ratings for several industrial and machinery stocks following the US election results, citing a more optimistic business outlook tied to the anticipated "pro-business Trump" policies.
However, the investment bank remains cautious, stating that “Trump/Red Sweep requires less caution but not broad bullishness with current starting point challenging.”
The firm upgraded Timken Company (NYSE:TKR), Cummins (NYSE:CMI), and Paccar (NASDAQ:PCAR), prioritizing "SMID cap&domestic oriented stories over global players with less compelling valuations."
Timken, an underperforming SMID cap, was upgraded from In-Line to Outperform, with Evercore noting it comes with “risky execution, yes, but worth the relative risk-reward.”
Paccar’s upgrade reflects Evercore’s view that while they are “still anxious about near-term margin pressure,” a recovery in the “second half of 2025 as emission pre-buy kicks in” could support growth.
Cummins, which analysts highlight as the “#1 truck engine&after treatment supplier,” may also benefit from an early truck emission pre-buy cycle expected to ramp up in 2025.
On the other hand, Evercore downgraded Eaton (NYSE:ETN), Caterpillar (NYSE:CAT), ESAB Corp (NYSE:ESAB), and Illinois Tool Works (NYSE:ITW), citing high valuations and specific risks.
Caterpillar faces “downside EPS risk” in light of “elevated construction equipment channel inventory” and strong global competition.
Meanwhile, Eaton’s downgrade is described as a “valuation ‘breather’ call,” as its recent performance has left limited room for additional gains despite solid fundamentals.
Overall, Evercore’s current approach toward the sector emphasizes a cautious stance, recommending “more selective” investments rather than a broad bullish view on the sector.
Their top 5 favorite stocks now include Parker Hannifin (NYSE:PH), United Rentals (NYSE:URI), Cummins, Timken, and Paccar.
This content was originally published on Investing.com
