Zacks Investment Research downgraded shares of Eaton Corporation (ETN) from NEUTRAL to UNDERPERFORM on October 20, 2014, with a target price of $56.00.
We are downgrading our recommendation on Eaton to Underperform from Neutral as soft market conditions are impacting the performance of a few of its business segments. The company lowered its full year earnings guidance to take into account lower margins from its Electrical Systems and Services segment. In addition, the performance of Eaton's Hydraulics business was patchy due to global weakness in the agricultural equipment market and construction equipment in China. If this trend continues, the company will find it difficult to meet its growth objective for this division in 2014. Currently, the pace of economic development in the U.S. is not uniform across all sectors. Eaton Corp.'s earnings in the second quarter were in line with the Zacks Consensus Estimate, while revenues fell short of the same.
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