'A new normal': MS sees short-cycle stabilisation for capital goods

Aalberts

12/12/2023 10:07

** Morgan Stanley sees PMIs bottoming out in early 2024,
followed by improved industrial production and short-cycle
stabilisation for capital goods companies in Europe and the U.S.
    ** "2024 will be a transition to a more typical, low growth
environment for industrial cyclicals," says the brokerage
    ** MS is bullish on grid investment, data centre buildout
and recovery from low orders in the wind sector
    ** Still, it says 2024 will not be "a plain vanilla recovery
environment", flagging risks from elevated inventory, inflated
margin expectations and capex deferrals
    ** It double-downgrades Finland's Wartsila  WRT1V.HE  to
"underweight" from "overweight" on a risk of weaker new ship
orders
    ** MS is cautious on mining equipment companies' order
intake; cuts Sandvik  SAND.ST  to "equal-weight" from
"overweight"
    ** It says timing of recovery in residential construction is
also less certain, cutting Legrand  LEGD.PA  to "equal-weight"
from "overweight" on its limited scope for consensus upgrades
    ** MS upgrades Aalberts  AALB.AS  to "overweight" from
"equal-weight", saying share price is disconnected from peers
and earnings
    ** It raises Signify  LIGHT.AS  to "overweight" from
"equal-weight", as it expects easing top-line pressure and cost
savings programme to pave way for an earnings upside 

 (Reporting by Greta Rosen Fondahn)
 ((Greta.RosenFondahn@thomsonreuters.com))