BofA analysts upgraded shares of Parker-Hannifin (NYSE:PH) to Buy from Neutral, raising the price target to $475 from $435 in a note to clients on Thursday.
They said PH is a "good company for uncertain times," and they see a long re-rating runway.
The "PMI has seemingly bottomed," said the analysts. "Furthermore, our destocking thesis has not played out as lead times remain stubbornly high, limiting risk to headline PMI."
In addition, the analysts believe Meggitt (LON:MGGT) accretion is a continuing source of upside/margin of safety, while "PH continues to close the gap on margins/returns with high-quality capital allocators Illinois Tool Works (NYSE:ITW) and Ametek (NYSE:AME) while trading at a steep discount."
The analysts also note that multiple data points indicate better than expected macro for the company, with survey results from the investment bank suggesting demand is "hanging in."
"Our analysis indicates that PH offers growth and returns similar to best-in-class peers like ITW and AME. While it trades at a steep discount, we expect the valuation gap to continue to close over time," they concluded.