Eaton Snaps Up 50% Stake in Jiangsu YiNeng Electric’s Busway Business

Shares of Eaton Corporation (ETN) rose marginally and closed at $146.69 in Friday’s trading session after the power management company acquired a 50% stake in Jiangsu YiNeng Electric’s busway business. The terms of the deal have not been disclosed so far.

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Jiangsu YiNeng Electric is a Chinese electrical equipment manufacturer. The company’s busway business reported revenues of about $60 million in 2020.

Eaton’s President of the Asia-Pacific region, Electrical Sector and Corporate China, Howard Liu, said, “This strategic agreement with YiNeng marks an exciting milestone for both of our companies. The combination of YiNeng’s busway capabilities and strong presence in China with Eaton’s broad power distribution and power quality portfolio enables us to expand packaged solutions that meet the needs of customers in the Asia-Pacific region.” (See Eaton stock chart on TipRanks)

On June 17, Credit Suisse analyst John Walsh reiterated a Buy rating on the stock and raised the price target to $163 from $158 (11.1% upside potential).

According to Walsh, the company’s recent portfolio churn, policy support for electric vehicles, growth in ESG investing, and further simplification of products could act as tailwinds for the company. Furthermore, the analyst believes Eaton’s C&I business could witness a compound annual growth rate (CAGR) of 6%, while the residential business could witness a CAGR of 5.3%.

The Wall Street community is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 6 Buys and 3 Holds. The average Eaton analyst price target of $157.78 implies 7.6% upside potential from current levels. Shares have gained 68.8% over the past year.