In a report released today, Nigel Coe from Wolfe Research upgraded Regal Rexnord (RRX – Research Report) to a Buy, with a price target of $151.00.
Nigel Coe upgraded Regal Rexnord’s rating due to a combination of its undervaluation and the potential for a favorable shift in market conditions. Coe observes that Regal Rexnord currently trades at a significant discount when compared to its peers, and this presents an attractive entry point for investors. Moreover, Coe anticipates that easing balance sheet concerns, coupled with an industry pivot towards short-cycle stocks, could lead to a reevaluation of the stock’s worth.
Coe identifies several factors that could drive Regal Rexnord’s stock higher, including a projected return to sales growth by the second quarter of 2024 and the alignment of fiscal year 2024 earnings expectations with current consensus, despite previous downward revisions. Additionally, a more dovish Federal Reserve could alleviate the pressure from the company’s debt load, which, in turn, would enhance its free cash flow profile. The anticipated rotation towards short-cycle stocks, if industrial lead indicators recover, is expected to benefit Regal Rexnord, thus underpinning Coe’s Buy rating.
In another report released on December 6, KeyBanc also reiterated a Buy rating on the stock with a $148.00 price target.
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Based on the recent corporate insider activity of 85 insiders, corporate insider sentiment is positive on the stock. This means that over the past quarter there has been an increase of insiders buying their shares of RRX in relation to earlier this year.
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Regal Rexnord (RRX) Company Description:
Regal Beloit Corp. engages in the manufacture of electric motors, electrical motion controls, power generation, and power transmission products. It operates through the following segments: Commercial and Industrial Systems, Climate Solutions and Power Transmission Solutions. The Commercial and Industrial Systems produces medium and large motors, commercial and industrial equipment, generator, and custom drives and systems. The Climate Solutions segment offers small motors, controls, and air moving solutions serving markets including residential and light commercial HVAC, water heaters and commercial refrigeration. The Power Transmission Solutions segment manufactures, sells, and services belt and chain drives, helical and worm gearing, mounted and unmounted bearings, couplings, modular plastic belts, conveying chains and components, hydraulic pump drives, large open gearing, and specialty mechanical products serving markets including beverage, bulk handling, metals, special machinery, energy, aerospace, and general industrial. The company was founded in 1955 and is headquartered in Beloit, WI.
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