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Speaking about Rockwell Automation (NYSE:ROK) after a meeting with its management, Morgan Stanley analyst Joshua Pokrzywinski said in a note to clients that they came away with “continued conviction in a generational capex cycle” that they expect to remain resilient despite a slowing macro environment and choppy supply chain.
“We expect orders to remain healthy as other verticals, both consumer and other short-cycle industrial markets, contend with demand destruction from rising rates and persistent inflation,” wrote Pokrzywinski.
The analyst, who has an Overweight rating and trimmed his price target to $260 (from $277) on the stock, added that at the same time, the pace of improvement on supply chains, particularly for semiconductors appears to be “at best a game of inches for ROK.”
As a result, Morgan Stanley is “reducing FY22 estimates, particularly the seasonal ramp in F4Q22 due to supply constraints.”
“Given the magnitude of the sell-off and persistent strength over the next 2-3 years, we see ROK risk/reward as favorable acknowledging consensus is high for the next 2 quarters.”
Rockwell Automation closed Monday’s session just 0.12% higher.
