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Inside the Analyst Ratings for Ingersoll Rand after the 2Q Results

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Nov. 20 2020, Updated 3:54 p.m. ET

Analyst recommendations for Ingersoll Rand

Ingersoll Rand has a Wall Street analyst consensus rating of “buy.” Of the 23 analysts surveyed by Bloomberg, 15 gave the company “buy” ratings, whereas nine gave “hold” ratings, and none gave “sell” ratings. Analysts have given a price target of $73.70 (as compared to $70.55 in 1Q16), which is 10.9% higher than the closing price of $66.46 on July 28.

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Ingersoll Rand’s recent ratings

Morgan Stanley (MS) also gave IR an “overweight” rating, with a price target on Wall Street of $76 (as compared to $73 in 1Q16) on July 28. This implies a 14.4% potential price appreciation over its close of $66.46 per share on July 28.

RBC Capital Markets (RBC) gave a “sector performer” rating to IR, with a price target of $63 (as compared to $60 in 1Q16). This price target implies a 5.2% potential decline over its close of $66.46 per share on July 28.

Stifel (SF) gave a “buy” rating on IR’s stock, with a price target of $75 on July 27. The price target implies a 12.8% potential appreciation.

What do these analyst recommendations mean?

None of the Wall Street analysts has a “sell” rating on Ingersoll Rand. This is a positive sign because IR’s strategic priorities in its stake sale of Hussmann and its IRS settlement are in place. IR will now concentrate on its core portfolio and on growth by new product initiatives, strategic investments, and acquisitions.

IR’s adjusted 2Q16 EPS was strong on account of operational productivity, cost-reduction initiatives, and lower commodity prices. Even in the current challenging environment, IR has increased its 2016 EPS target to $4.0–$4.1 per share (as compared to its previous guidance of $3.95–$4.10 per share) by giving a strong operational outlook.

Dividends?

Notably, IR has increased its 2016 dividend by 10%, showing strong expected cash flows and a solid balance sheet. The company also aims to repurchase shares (4.9 million shares worth $250 million, year-to-date) and reduce its debt.

Wall Street analysts have meanwhile increased their median target price for IR by 4.5%, up from $70.5 in 1Q16 and $73.7 in 1Q16. But will IR be successful in meeting its upwardly revised 2016 earning target? To know that, we’ll have to watch and wait.

Remember, IR is a part of the Guggenheim Mid-Cap Core ETF (CZA) and accounts for 2.0% of the fund’s total holdings. IR is also part of the S&P 500 (SPY).

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