Barclays reshuffled its U.S. multi-industry ratings, downgrading Illinois Tool Works and Fortive while upgrading Allegion, as it assessed opportunities and risks for the sector heading into the second half of 2025. The brokerage cut Illinois Tool Works to Underweight from Equal weight, citing slow recovery in short-cycle industrial demand and limited earnings growth potential, and lowered Fortive to Equal weight from Overweight on subdued organic growth and limited capital deployment prospects. Allegion was lifted to Equal weight from Underweight with its price target raised to $163 from $156. Barclays kept a neutral stance on the industry overall, expecting the sector to perform roughly in line with the S&P 500 in 2025, with potential for catch-up later this year as investors focus on prospects for 2026. However, it noted valuations remain \"very, very expensive\" despite recent compression. Preferred names include GE Vernova, 3M, nVent, Pentair, and Rockwell Automation, driven by themes such as electric utility capital spending, artificial intelligence and data center demand, residential and consumer recovery, and factory automation. Barclays said these companies are positioned for accelerating growth or margin improvement, with some trading at attractive valuations. It was more cautious on Johnson Controls, Otis Worldwide, and Roper Technologies, flagging high expectations, persistent margin pressures and underwhelming software growth. The bank also warned that investor enthusiasm for a broad industrial recovery in 2026 marks the fourth consecutive year of such optimism, with early guidance from some companies pointing to weaker industrial volumes into mid-2026.

Barclays shifts multi-industry ratings as it sees selective upside in second half

Barclays has revised its U.S. multi-industry stock ratings for the second half of 2025, downgrading Illinois Tool Works and Fortive while upgrading Allegion. The bank maintains a neutral stance on the sector overall, expecting performance in line with the S&P 500, though valuations remain 'very, very expensive'. Preferred names include GE Vernova, 3M, nVent, Pentair, and Rockwell Automation, driven by demand in electric utilities, AI, data centers, consumer recovery, and factory automation. Barclays expresses caution on Johnson Controls, Otis Worldwide, and Roper Technologies due to margin pressures and weak software growth, noting that investor optimism for a 2026 industrial recovery has persisted for four consecutive years, with early guidance suggesting weaker industrial volumes into mid-2026.