Bernstein Research downgraded Swiss industrial giant ABB Ltd. to 'Neutral' from 'Outperform' on Friday, citing an increasingly mixed outlook for the automation and electrification sectors amid persistent global demand uncertainty and intensifying competitive pressures.
The research firm maintained its price target at 70 Swiss francs per share, a level it first set in May 2024. Bernstein analysts acknowledged ABB's strong position in industrial automation and robotics but highlighted risks from slower-than-expected capital expenditure in key end-markets, particularly in Europe and China.
The downgrade follows a period of volatility for ABB's stock, which has traded in a range of 45 to 65 CHF over the past 12 months. The company's order backlog remains robust, but Bernstein warned that visibility on future demand remains limited due to macroeconomic headwinds, including elevated interest rates and geopolitical tensions.
ABB, headquartered in Zurich, reported second-quarter earnings on July 18, posting adjusted net profit of $1.2 billion, down 5% year-over-year. Revenue declined 3% to $8.1 billion, reflecting weaker demand in discrete automation and motion businesses. The company reiterated its full-year guidance, expecting organic sales growth of 3-5% and adjusted operating margins between 14.5% and 15.5%.
Bernstein's move aligns with a broader trend of cautious sentiment among industrial sector analysts, as concerns mount over the sustainability of post-pandemic demand recovery. ABB's shares were down 1.2% in pre-market trading following the report.
Analysts at Bernstein did not provide an updated earnings forecast but emphasized that ABB's long-term growth prospects remain tied to its ability to navigate cyclical downturns and capitalize on structural trends such as energy efficiency and digitalization in industrial processes.
