BofA Sees Mostly Inline Q1 For Industrials, Highlights 3M, JCI, GE Vernova As Top Picks

B of A Securities analysts Andrew Obin and Sabrina Abrams shared their expectations for industrial stocks ahead of first-quarter earnings.

The analysts project the earnings to be a beat or at par, which is expected to be supported by strong second-quarter performances from industrial distributors like Fastenal Company (NASDAQ:FAST) and MSCI Inc. (NYSE:MSCI).

The analyst adds that a key risk is that investors won’t see any “bad” news, negative surprises, or downward estimate revisions until the second-quarter earnings season. He projects companies maintaining or lowering 2025 guidance.

Obin and Abrams anticipate capital expenditure and operating expense decisions to be made in the mid-to-late second quarter, positioning the third quarter as a potential earnings trough.

In particular, they foresee increased U.S. investment, particularly in areas with lower labor intensity and established supply chain infrastructure that can be scaled efficiently.

The analyst says that pricing power remains a potential upside risk to the outlook, while a broader economic downturn could weigh on results.

Following the April 9 announcement of a 90-day pause on reciprocal tariffs, the analysts are proactively reducing the estimates due to elevated uncertainty and the continuation of established tariffs (minimum 10%, with some as high as 145% on Chinese imports).

They lowered the second-quarter adjusted EPS forecast by 9%, the full-year 2025 forecast by 6%, and the 2026 forecast by 3.5%.

Overall, the analysts revised the price forecast for 22 companies in the sector ahead of the earnings season.

Obin and Abrams named 3M Company (NYSE:MMM), Johnson Controls International plc (NYSE:JCI) and GE Vernova Inc. (NYSE:GEV) as their top picks.

3M: They lowered the price forecast from $179 to $170 (with a Buy rating) and project margin upside driven by ongoing cost reduction initiatives.

For the first quarter, Obin and Abrams forecast adjusted EPS of $1.73 (slightly below consensus of $1.75) and organic revenue growth of 1.4% (vs consensus of 1.8%).

Johnson Controls: The analysts slashed the price forecast from $100 to $95 and wrote that the company remains a portfolio transformation story. They estimate quarterly adjusted EPS of $0.79 (in line with consensus).

GE Vernova: The analysts see a price forecast of $485 at a Buy rating.

They believe the company stands out for delivering some of the strongest earnings growth in their coverage despite lingering concerns about slower data center electricity demand.

The analysts expect decent first-quarter orders (but not huge) and a potential upside from margins.

They estimate the first-quarter adjusted EBITDA of $0.3 billion (in line with the Visible Alpha consensus), with 2% year-over-year revenue growth (6% on an organic basis) and adjusted EPS of $0.08.

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