Wells Fargo downgraded Rockwell Automation (NYSE:ROK) to Equal Weight from Overweight, citing limited upside after a sharp run-up in the stock and the likelihood of a cautious fiscal 2026 earnings outlook.
The firm expects Rockwell to issue FY26 EPS guidance with a midpoint of $11.25, slightly below the current consensus of $11.50.
While management has a record of conservative guidance, Wells Fargo said the stock’s roughly 30% valuation premium to peers already prices in strong execution.
Rockwell shares have climbed nearly 50% since April, outperforming both the broader industrial sector and peers.
Wells Fargo noted that further gains may be harder to justify without near-term earnings catalysts.
Rockwell recently launched a $2 billion investment program focused on U.S. plants and digital infrastructure.
While this is expected to support long-term margin expansion, the payoff will take time. The company is also coming off sizable cost savings programs, which have already driven much of the recent margin improvement.
Wells Fargo raised its FY25 EPS estimate to $10.05 and cut its price target to $345 from $365, saying the stock is trading near its historical valuation highs.
The firm still sees structural appeal in Rockwell’s positioning, especially amid rising U.S. manufacturing investment, but said tariff-related uncertainty and timing of returns from new investments add near-term risk.
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