Illinois Tool Works, Fortive downgraded at Barclays; Allegion upgraded with industrial outlook

Barclays research analyst Julian Mitchell on Thursday outlined a mixed outlook for the U.S. multi-industry sector, highlighting stocks with favorable risk-reward profiles while downgrading others following second-quarter earnings.

The bank upgraded Allegion (NYSE:ALLE) to Equal Weight from Underweight and raised its price target to $163 from $156, citing improved fundamentals. It also lifted targets for nVent Electric (NYSE:NVT) to $105 from $100 and Rockwell Automation (NYSE:ROK) to $370 from $357, arguing that Wall Street’s 2026 sales and earnings estimates remain too low.

Preferred picks include GE Vernova (GEV), 3M (NYSE:MMM), NVent Electric (NYSE:NVT), Pentair (NYSE:PNR) and Rockwell (NYSE:ROK), all of which Barclays believes are positioned to benefit from trends in electric utility capital spending, data center expansion, residential demand and factory automation.

Downgrades on earnings potential

Conversely, the firm cut Illinois Tool Works (NYSE:ITW) to Underweight from Equal Weight, keeping its $243 target, on concerns over slow short-cycle industrial recovery and limited earnings growth potential.

Fortive (NYSE:FTV) was lowered to Equal Weight from Overweight, with its price target reduced to $54 from $58, amid subdued organic growth expectations and investor skepticism about catalysts.

Barclays also flagged caution on Johnson Controls (NYSE:JCI), Otis Worldwide (NYSE:OTIS) and Roper Technologies (NASDAQ:ROP), citing stretched valuations, margin pressures, and underwhelming growth in some software segments.

Mitchell in a report to clients maintained a Neutral industry view, noting that while AI and data center demand support around 20% of covered companies, the sector has underperformed the Standard & Poor’s 500 stock index (SP500) year-to-date after a tough second-quarter earnings season.

He said he expects performance to align with the broader market through 2025, with investor sentiment hinging on hopes for a stronger 2026 despite muted demand trends in many industrial markets.