Timken's (TKR) ongoing transformation could bear fruit for years to come, starting in 2027 to 2028, with the new management strategy positioning the company for higher margins, strong free cash flow and greater exposure to higher-growth markets, BofA Securities said in a Tuesday note.

The investment firm said management is now focused on portfolio optimization, 80/20 strategy and expanding into higher-growth areas such as aerospace and defense, automation and robotics.

BofA forecasts 2026 earnings of $6.30 per share, near the high end of Timken's guidance, with management's three-year earnings growth target supported by self-help initiatives, a potential cyclical recovery and favorable business mix.

The firm said it also sees free cash flow per share accelerating to record levels in the coming years, supported by improving volumes and a shift toward higher-margin businesses.

BofA Securities upgraded its rating on the stock to buy from neutral, and raised its price target to $135 from $129.

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