Eaton's (ETN) margins are expected to meaningfully increase in Q3 and beyond on account of proactive pricing actions and better execution, UBS said in a research note emailed Tuesday.
UBS projects a 46% increase in earnings power over the next two years, resulting in 2028 earnings per share of $19.95, which sits 7% ahead of consensus, according to the note.
The company's data center revenue is expected to drive continued strong double-digit organic growth, which, along with high-single digit aerospace growth should make Eaton's topline performance "exceptional" over the next several years, the firm said.
UBS said it modeling 18% annual EPS growth through 2028, assuming 10% or above organic sales growth and margin improvement with incrementals of 35% over time.
UBS upgraded its rating to buy from neutral and raised its price target to $515 per share from $450.
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