Oct. 6 at 7:24 PM
Wolfe Research upgraded its U.S. Electrical Equipment & Multi-Industry (EE/MI) sector rating from Underweight to Neutral, citing attractive relative valuations after underperforming the S&P 500 and most industrial peers this year. The sector is up 8.7% in 2025, trailing the S&P 500 by about five points and global capital goods sub-sectors by roughly nine points.
Wolfe noted the sector’s 12-month forward P/E of about 22x sits near its 1- and 10-year medians and below July’s peak of 24x, leaving it at a rare 4% discount to the index. Data center and AI demand boosted some stocks like Vertiv (+15.6%), while Hubbell and Generac dragged due to valuation and guidance concerns. Distributors such as Fastenal fell 1.7% amid valuation pressure.
The weak performance reflects soft residential HVAC trends and fading growth expectations.
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