Shares of global industrial automation and digital transformation services provider Rockwell Automation (ROK) lost 1.5% on Tuesday and fell another 1.2% in pre-market trading on Wednesday despite reporting solid financial results for the third quarter of Fiscal Year 2021.
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Adjusted earnings per share (EPS) increased 75% year-over-year to $2.31, beating the Street’s estimate of $2.07. Quarterly sales rose 32.6% to $1.85 billion, exceeding analysts’ expectations of $1.78 billion.
Intelligent Devices sales grew 33.8% to $882.9 million; sales of Software & Control segment climbed 39.7% to $509.6 million; and Lifecycle Services segment’s sales were up 23.4% to $455.7 million.
The Chairman and CEO of Rockwell, Blake Moret, said, “These results reflect the high demand we are seeing for Rockwell’s core automation and digital transformation solutions.” (See Rockwell stock chart on TipRanks)
Following the third-quarter results, the company updated its guidance for Fiscal Year 2021. Rockwell expects sales growth of around 12%, compared to the earlier projection of 9% to 12%. Adjusted EPS is likely to be in the range of $9.10 to $9.30, narrower than the previous guidance of $8.95 to $9.35.
On July 15, HSBC analyst Puneet Garg maintained a Hold rating on the stock but raised the price target to $285 from $247 (3% downside potential). The analyst said, “Rockwell has robust secular automation fundamentals, strong cash flow generation and best-in-class RoIC (Return on Invested Capital).”
Overall, the stock has a Hold consensus based on 4 Buys, 6 Holds and 3 Sells. The average Rockwell Automation price target of $280.23 implies 4.5% downside potential to current levels. The company’s shares have gained 32% over the past year.
According to TipRanks’ Smart Score rating system, Rockwell scores an 8 out of 10, suggesting that the stock is likely to outperform market averages.
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