Zacks Investment Research upgraded shares of Illinois Tool Works Inc. (ITW) from NEUTRAL to OUTPERFORM on April 16, 2014, with a target price of $99.00.
Illinois Tool's upbeat fourth-quarter 2013 results and robust outlook for 2014 have made us optimistic about the company's performance in the quarters ahead. Earnings per share of $0.92 surpassed the Zacks Consensus Estimate of $0.91. Revenue grew 4.8% while operating margin expanded 260 basis points (bps), aided by a 110 bps contribution from Enterprise Strategic initiatives. For 2014, earnings per share are expected to be up 18-24% while organic revenue is expected to grow in a 2-3% range. Shareholders will be rewarded with $700 million of dividends and $1.8 billion worth of share buybacks. Cost savings of $600-$800 million are targeted through business structure simplification and strategic sourcing strategies. Thus, we upgrade our recommendation on Illinois Tool to Outperform.
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