Zacks Investment Research downgraded shares of Eaton Corporation (ETN) from OUTPERFORM to NEUTRAL on June 12, 2012, with a target price of $43.00.
We have lowered our recommendation on Eaton Corporation to Neutral from Outperform as its decision to acquire Coopers Industries will substantially increase its debt burden. First quarter results lagged the Zacks Consensus Estimate on the top-line, but marginally surpassed on earnings per share. Eaton expects its operating segments to perform well during the rest of the year, and has raised its global sales forecast and earnings expectation, taking into account its leading positions in the core electrical, hydraulic and aerospace market segments. However, its Electrical rest of world segment is expected to be a marginal drag, as demand from Europe and the Chinese markets are forecasted to pick up only at the latter end of the year. In addition, customer consolidation in the automotive segment will also impact the revenue of the company.
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