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Emerson Palace (NYSE:EMR) has been downgraded to an investment rating of Hold from Buy by analysts at Deutsche Bank.
They said Emerson’s deal sell most of the interest in the climate technology business, where products for heating, ventilation and air conditioning, for the private equity firm Blackstone (BX) is “a long-term move for business.”
The bank says Emerson may exit its newly named Safety and Productivity division as part of a broader effort to dismantle non-core assets and focus on technology and industrial automation .
Deutsche Bank lowered its price target for Emerson to $96 a share from $97 a share.
Today, Emerson said it has completed the sale of US$3 billion from its InSinkErator business, which makes instant water heaters and garbage disposals, to Whirlpool (WHR). Emerson acquired the company in 1968. This year, the company also announced an agreement to sell its Therm-O-Disc sensor and protection technology business to One Rock Capital Partners.
Emerson’s strategy of focusing on industrial automation began last year with the merger of two of its software businesses with Aspen Technology (AZPN). Emerson has also acquired several tech companies to build businesses.
Emerson yesterday reported adjusted EPS for its fiscal fourth quarter of $1.53, beating Wall Street’s consensus estimate of $0.14. Revenue rose 8.3% from a year earlier to $5.26 billion, beating the median estimate of $30 million.
Emerson shares are down 5.7% this year through October 31, compared with a 19% drop for the S&P 500 index (SP500).
Looking for Alpha Contributor Matthew Smith rating Emerson (EMR) as Buy based on the company’s effort to focus on industrial automation through acquisition and divestment.
