Bernstein initiated coverage of the U.S. multi-industrials and electrical equipment space in a research note published Wednesday, singling out Vertiv and nVent as its top picks within data center power and cooling. The firm gave both companies Outperform ratings and set price targets that imply roughly 30% to 40% upside for each stock.
Analyst Varun Govindaraj is quoted in the note saying the two firms "have real technical moats" and that they are well-positioned even if the pace of data center expansion slows over time. Bernstein framed these initiations against a backdrop where data center buildouts have "reweighed where capital is flowing" across the broader industrials landscape.
HVAC and cooling names
In the HVAC cohort, Bernstein began coverage of Trane Technologies and Johnson Controls, assigning both Outperform ratings. The firm described Trane as "great operators" who are well integrated into the data center cooling market. Johnson Controls was highlighted for a lean transformation that is "showing strong results," alongside what Bernstein described as near-term chiller tailwinds.
Carrier was rated Market-Perform. Bernstein noted the company faces "multiple competing forces," including a favorable data center outlook that is partially offset by a weak U.S. residential outlook and mixed signals coming from its Viessmann business.
Automation and related industrials
Within automation, Bernstein assigned Emerson an Outperform rating, citing tailwinds in process automation and a favorable view on test and measurement. Rockwell Automation and Honeywell were rated Market-Perform. The note said Rockwell's upside appears largely reflected in its current price, and described Honeywell as "still a 'show me' story."
Beyond those names, Bernstein rated Parker-Hannifin Outperform and called it "an outstandingly well-run company." The firm initiated Otis Worldwide at Outperform as well. By contrast, 3M was given an Underperform rating, with Bernstein pointing to concerns that its "R&D engine remains impaired" and that PFAS liabilities "remain an overhang."
Market context and quotes
The research note repeatedly ties the coverage initiations to changing capital allocation patterns driven by data center construction. Bernstein's language emphasizes technical strengths among certain vendors while also recognizing pockets of complexity and headwinds for others.
Market tickers and moves cited in the note
The piece included a snapshot of market tickers and intraday moves referenced in the publication: MMM +1.65%, EMR +2.41%, PH +2.54%, JCI +2.57%, HON +1.84%, ROK +1.95%, NVT -0.01%, VRT -3.68%, TT +2.58%, OTIS +2.36%, CARR +5.78%.
What this means
- Bernstein's Outperform calls on Vertiv and nVent signal conviction in select suppliers of data center power and cooling equipment, with price targets implying material upside.
- The firm is constructive on some HVAC and automation names while taking a more cautious stance on others, reflecting a differentiated view across industrial subsectors.
- 3M's Underperform rating and cited concerns around R&D and PFAS liabilities highlight ongoing company-specific risks within the industrial complex.
Analyst language retained from the note
"have real technical moats"; "reweighed where capital is flowing"; "great operators"; "showing strong results"; "multiple competing forces,"; "still a 'show me' story."