The sky is not falling for Club name Eaton — even if the chart this year for the electrical equipment supplier suggests otherwise. The news KeyBanc upgraded Eaton to its buy-equivalent overweight rating after the company’s investor day Tuesday afternoon. The analysts said the stock’s recent pullback has created a “unique entry point into one of our highest-quality names.” Their price target of $340 a share implies about 20% upside from where shares closed Tuesday. However, that level is still $31 below its highest close of the year on Jan. 22, which was just days before the emergence of Chinese startup DeepSeek sparked a wave of concerns about artificial intelligence investments. Shares of Eaton, whose fast-growing data center business benefits from that spending, tumbled in response. KeyBanc believes Eaton’s actual business is in fine shape, though, and the analysts said the company’s “robust” project backlogs in its electrical and aerospace segments “provide greater visibility in an increasingly uncertain certain world.” Even with AI spending fears still lingering, the analysts said they were encouraged by Eaton management noting that only 20% of its electrical backlog in its North and South American segment is tied to AI. That gives KeyBanc confidence that Eaton’s data center business can sustain growth in the high-teens percentages. More generally, KeyBanc liked the long-term growth targets outlined at Tuesday’s investor event. Eaton projected 6% to 9% organic growth through 2030, compared with the 5% to 8% target previously offered for the 2020 to 2025 period. Elsewhere, Jefferies lowered its price target on Wednesday to $335 a share, down from $390, but kept its buy target on the stock. At its investor day, Eaton projected its segment operating margin to be around 28% in 2030, up from 24% in 2024 and 17.3% in 2019. Jefferies analysts said, “Guidance felt conservative relative to segment forecasts, with additional upside potential from capital deployment.” Shares of Eaton rose more than 3% on Wednesday, outperforming both the S & P 500, which advanced modestly and the industrials sector, which was roughly flat. Big picture Eaton’s stock hasn’t been able to catch a break since the Jan. 27 DeepSeek panic roiled the AI trade — even though just a few days later the company reported earnings , and executives made clear they remained confident in the outlook for its data center business. Many of the biggest data center operators — including Club names Meta Platforms , Microsoft , and Amazon — also have since reaffirmed their spending AI spending plans for the year ahead. ETN YTD mountain Eaton YTD Still, the AI trade hasn’t been able to recapture the momentum it had in 2023 and 2024, years in which Eaton soared 53% and 38%, respectively. Eaton is one of the portfolio’s worst-performing stocks in 2025. Other stocks near the bottom of us include AI chipmakers Nvidia and Broadcom , as well as Salesforce , which has bet big on AI software tools. Emerging worries about the health of the U.S. economy in recent weeks also haven’t helped shares of industrial companies such as Eaton. The sector is seen as economically sensitive, and money has been flowing into more defensive corners of the market such as consumer staples. Bottom line Eaton the company is in a much better shape than Eaton the stock. “This is a total overreaction,” Jim Cramer said on Wednesday’s Morning Meeting , as he pointed to Eaton’s stock performance since late January. “Total overreaction.” We bought the dip on Feb. 21, adding 25 shares at roughly $296 apiece, and Jim suggested others follow suit. “It’s time to buy some Eaton if you haven’t bought any Eaton,” he added. While our confidence in Eaton hadn’t been shaken, the company’s investor day was nevertheless a positive development. Eaton’s organic growth forecast through 2030, in particular, is “very strong for an industrial,” Jim said. Eaton also expects additional margin expansion in the years ahead — a good sign for earnings growth. (Jim Cramer’s Charitable Trust is long ETN. See here for a full list of the stocks.) As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade. THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY , TOGETHER WITH OUR DISCLAIMER . NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
Andrey Semenov | Istock | Getty Images
The sky is not falling for Club name Eaton — even if the chart this year for the electrical equipment supplier suggests otherwise.
The news
KeyBanc upgraded Eaton to its buy-equivalent overweight rating after the company’s investor day Tuesday afternoon. The analysts said the stock’s recent pullback has created a “unique entry point into one of our highest-quality names.” Their price target of $340 a share implies about 20% upside from where shares closed Tuesday. However, that level is still $31 below its highest close of the year on Jan. 22, which was just days before the emergence of Chinese startup DeepSeek sparked a wave of concerns about artificial intelligence investments. Shares of Eaton, whose fast-growing data center business benefits from that spending, tumbled in response.
KeyBanc believes Eaton’s actual business is in fine shape, though, and the analysts said the company’s “robust” project backlogs in its electrical and aerospace segments “provide greater visibility in an increasingly uncertain certain world.” Even with AI spending fears still lingering, the analysts said they were encouraged by Eaton management noting that only 20% of its electrical backlog in its North and South American segment is tied to AI. That gives KeyBanc confidence that Eaton’s data center business can sustain growth in the high-teens percentages. More generally, KeyBanc liked the long-term growth targets outlined at Tuesday’s investor event. Eaton projected 6% to 9% organic growth through 2030, compared with the 5% to 8% target previously offered for the 2020 to 2025 period.
Elsewhere, Jefferies lowered its price target on Wednesday to $335 a share, down from $390, but kept its buy target on the stock. At its investor day, Eaton projected its segment operating margin to be around 28% in 2030, up from 24% in 2024 and 17.3% in 2019. Jefferies analysts said, “Guidance felt conservative relative to segment forecasts, with additional upside potential from capital deployment.”
Shares of Eaton rose more than 3% on Wednesday, outperforming both the S&P 500, which advanced modestly and the industrials sector, which was roughly flat.
Big picture
Eaton’s stock hasn’t been able to catch a break since the Jan. 27 DeepSeek panic roiled the AI trade — even though just a few days later the company reported earnings, and executives made clear they remained confident in the outlook for its data center business. Many of the biggest data center operators — including Club names Meta Platforms, Microsoft, and Amazon — also have since reaffirmed their spending AI spending plans for the year ahead.
Stock Chart IconStock chart icon
Eaton YTD
Still, the AI trade hasn’t been able to recapture the momentum it had in 2023 and 2024, years in which Eaton soared 53% and 38%, respectively. Eaton is one of the portfolio’s worst-performing stocks in 2025. Other stocks near the bottom of us include AI chipmakers Nvidia and Broadcom, as well as Salesforce, which has bet big on AI software tools.
Emerging worries about the health of the U.S. economy in recent weeks also haven’t helped shares of industrial companies such as Eaton. The sector is seen as economically sensitive, and money has been flowing into more defensive corners of the market such as consumer staples.
Bottom line
Eaton the company is in a much better shape than Eaton the stock. “This is a total overreaction,” Jim Cramer said on Wednesday’s Morning Meeting, as he pointed to Eaton’s stock performance since late January. “Total overreaction.” We bought the dip on Feb. 21, adding 25 shares at roughly $296 apiece, and Jim suggested others follow suit. “It’s time to buy some Eaton if you haven’t bought any Eaton,” he added.
While our confidence in Eaton hadn’t been shaken, the company’s investor day was nevertheless a positive development. Eaton’s organic growth forecast through 2030, in particular, is “very strong for an industrial,” Jim said. Eaton also expects additional margin expansion in the years ahead — a good sign for earnings growth.
(Jim Cramer’s Charitable Trust is long ETN. See here for a full list of the stocks.)
As a subscriber to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trade alert before buying or selling a stock in his charitable trust’s portfolio. If Jim has talked about a stock on CNBC TV, he waits 72 hours after issuing the trade alert before executing the trade.
THE ABOVE INVESTING CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH OUR DISCLAIMER. NO FIDUCIARY OBLIGATION OR DUTY EXISTS, OR IS CREATED, BY VIRTUE OF YOUR RECEIPT OF ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTING CLUB. NO SPECIFIC OUTCOME OR PROFIT IS GUARANTEED.
