Al Root

Diversified industrial manufacturer ITW is especially exposed to the impact of President Donald Trump's tariffs, BofA Securities says.

On Wednesday, analyst Andrew Obin cut his rating to Sell from Hold and reduced his price target to $220 from $245 a share.

Shares were down 0.6% in early trading at $238.43, while the S&P 500 and Dow Jones Industrial Average were up 0.2% and 0.4%, respectively. Coming into Wednesday trading, ITW shares were down about 5% year to date.

"ITW is uniquely vulnerable to tariff disruption given its end market mix," wrote Obin.

ITW does a lot of things. It manufactures auto parts, food equipment, test equipment for the electronics industry, welding equipment, and construction products, among other things. It's about as diversified an industrial manufacturer as an investor can find.

But exposure to the car and consumer end markets, both of which face tariff pressures, creates headwinds that are too difficult to overcome, says Obin.

"We see negative earnings [estimate] revisions largely on -[weaker] organic growth," he wrote.

ITW didn't immediately respond to a request for comment about the cut. Companies don't typically comment on stock ratings changes.

ITW stock doesn't have a lot of support on Wall Street. Overall, just 14% of analysts covering ITW stock rate shares Buy, while the average Buy-rating ratio for stocks in the S&P 500 is about 55%. The average analyst price target for ITW stock is about $250 a share.

The downgrade to Sell doesn't change the Buy-rating ratio. It changes the Sell-rating ratio. About 23% of analysts covering ITW rate shares sell, about three times higher than the average Sell-rating ratio in the S&P 500.

Obin notes that the company has a history of strong business execution, but that is reflected in valuation. Shares trade for about 23 times estimated 2025 earnings. The S&P 500 trades for closer to 21 times.

That valuation will start to look even pricier if estimates come down. For Wall Street, ITW stock looks stuck until the broader macroeconomic situation improves.

Write to Al Root at allen.root@dowjones.com

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May 07, 2025 10:39 ET (14:39 GMT)

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