Emerson Electric (EMR) is expected to benefit from stronger demand in power, LNG, semiconductors, aerospace and defense, while backlog visibility and cost control should help offset Middle East pressure, RBC Capital Markets said in a note Wednesday.

The investment firm said Emerson raised the low end of its fiscal 2026 EPS outlook even after cutting organic sales guidance because of continued Middle East disruption, but RBC still expects sales to improve in H2, supported by backlog visibility, though higher project volumes could weigh on margins.

Emerson's growth markets continue to improve, with the project funnel rising to $11.2 billion, and the test and measurement demand should remain strong through 2027, helped by semiconductor, aerospace and defense, space, and data center spending, according to the note.

The Middle East impact was larger than expected, but Emerson is targeting about $100 million in near-term repair and service work at damaged customer sites, RBC added.

RBC kept its outperform rating and lifted its price target for Emerson to $169 from $161.

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