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
CBE NEUTRAL $43.10
EMR BUY $44.94
ETN BUY $69.01
NATI NEUTRAL $29.28
PH BUY $58.79
ROK NEUTRAL $48.60
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
Jan/Feb.
• 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
mos.
