Longbow Research says the market is improving!

Longbow Research has published their January Automation Update. They are far more bullish in this report than in previous months' issues.

Here's Longbow Research's positions on the companies they follow in the automation marketplace:

Ticker Rating Price

AME BUY $38.86


EMR BUY $44.94

ETN BUY $69.01


PH BUY $58.79


ROP BUY $52.50

And here's the beef:

Bottom line: Our January survey shows improving MRO demand and

outlook in the automation market, despite seasonal sequential declines.

ROK, EMR, and PH instituted January price increases of about 2-5%.

Responses on demand were mixed: while many reported a seasonal

sequential slow-down, contacts are seeing positive y/y comps, particularly

in MRO. Anecdotal comments also point to Process markets having

bottomed earlier than anticipated, suggesting a pickup in 2H10 vs. 2011.

Food & beverage, semiconductors, medical, power, water & wastewater,

and aerospace remain relatively strong, while pulp & paper, steel,

electrical contractors, and comm. construction remain weak. Solar and

gen. industrial markets were mixed.

Controller prices remain relatively stable, while electrical boxes and some

instruments have increased to a greater degree due to rising raw material

costs. Contacts report prices up 2-5% for ROK, EMR, and PH effective in


Destocking appears to have run its course, and contacts are concerned that

distributor inventories would be insufficient given improving demand and

lower supplier inventories.

Automation markets generally lag 12+ months behind the general

economy, but it appears that the sector has bottomed and is poised to

rebound earlier than normal. Contacts see sequential improvements in

order activity since our Sept. survey, though orders remain well below

2007-2008 levels. Anecdotally, the tone among contacts has shifted to one

of cautious optimism; many expect modest increases of roughly 5% vs.

2009 throughout 1H10, though most gave numerous caveats around this

scenario. Sixty percent expect improvement in the next 12 mos., 30%

expect flat conditions, and 10% expect worse Automation markets. Those

with a negative outlook did not expect markets to turn for another 6-8


Read the whole report here.