Parker-Hannifin (PH) has gained firmer through-cycle resiliency by boosting its aerospace business size and raising exposure to longer-cycle industrial markets via acquisitions, Morgan Stanley said Thursday in an initiation note.
The company, which, according to the investment firm has transformed into a more "secular business," provides motion and control technologies to industrial and aerospace end markets.
Morgan Stanley noted that the company is "attractively positioned" to weather the second wave of tariffs mainly due to its exposure to US manufacturing, strong pricing power and protected distribution network.
The Wall Street firm believes that the company "deserves to trade at a premium vs history," owing to its "best-in-class" execution, pricing power and growing credibility in the M&A market.
Morgan Stanley said the company's North American industrial business will be the key driver for its equity over the next 12 months amid margins pushing up against the incremental rate and the aerospace cycle decelerating to a more normalized profile.
Morgan Stanley initiated the coverage with an equal-weight rating and a $700 price target.
Price: 663.99, Change: -1.27, Percent Change: -0.19
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