Efforts to reshore manufacturing are among the factors driving sales for industrial automation companies. And that should boost Symbotic stock and others in the industrial technology space, a Wall Street analyst says.
KeyBanc Capital Markets analyst Ken Newman initiated coverage of five industrial automation stocks on Monday. While he is positive on the space longer term, Newman sees just two stocks benefiting in the short term.
Newman rates Emerson Electric and Symbotic stock as overweight, or buy. Meanwhile, he started coverage of Cognex, Rockwell Automation and Zebra Technologies at sector weight, or neutral.
"The industrial automation industry remains ripe for increased investment and adoption supported by multiple secular crosscurrents," Newman said in a note to clients.
He cited "government stimulus to secure and stabilize global manufacturing supply chains" as a key factor. Other factors include tight labor markets and efficiency gains from technological innovations.
Symbotic Stock Falls In Rough Session
Newman set price targets of 120 on Emerson stock and 50 on Symbotic stock.
On the stock market today, Emerson stock retreated 0.9% to 94.85. Symbotic stock fell 9.7% to 31.19 amid a rough day for stocks overall.
Newman is bullish on Emerson's transformation into a "pure-play automation company" from a diversified industrial conglomerate.
Emerson has been on an acquisition spree of late. In April, Emerson agreed to buy National Instruments for $8.2 billion in cash. In August, Emerson bought smaller firms Afag Holding and Flexim.
Meanwhile, Newman views Symbotic as a "disruptive technology leader in autonomous supply chain solutions." The company has a $23 billion-plus backlog from some of the largest retailers in North America, he said.
Walmart Owns Stake In Symbotic
Retail giant Walmart accounts for about 30% of Symbotic's project backlog. Also, Walmart owns about 19% of Symbotic stock. Other Symbotic customers include grocery chain Albertsons and C&S Wholesale Grocers.
Emerson stock ranks fifth out of 23 stocks in IBD's Diversified Operations industry group, according to IBD Stock Checkup. It has an IBD Composite Rating of 91 out of 99.
Symbotic stock ranks No. 37 out of 49 stocks in IBD's Machinery-General Industry group, according to IBD Stock Checkup. SYM stock has a middling Composite Rating of 54.
IBD's Composite Rating is a blend of key fundamental and technical metrics to help investors gauge a stock's strengths. The best growth stocks have a Composite Rating of 90 or better.
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