Eaton, International Paper Upgraded as Wall Street Analysts Target Industrials

Wall Street analysts returned from the Labor Day holiday with a series of significant ratings changes, including key industrial upgrades, strategic pair trades, and broad reassessments of the consumer and biopharma sectors.

Industrials and Materials in Focus

The industrial and materials sectors saw several bullish calls. On Tuesday, UBS upgraded Eaton Corporation (ETN) to Buy from Neutral, raising its price target to $515 from $450. The firm cited improved execution and proactive pricing, projecting a 46% increase in earnings power over the next two years and forecasting 2028 EPS of $19.95, which is 7% above consensus estimates.

JPMorgan executed a classic pair trade in the equipment rental space on Thursday. The bank:

• Upgraded Herc Holdings (HRI) to Overweight from Neutral, citing a valuation discount that has widened beyond historical norms.
• Downgraded United Rentals (URI) to Neutral from Overweight, noting that its acquisition-driven growth model may be slowing as the pool of large targets diminishes. URI shares fell 4.6% following the call.

Closing the week, BofA Securities upgraded International Paper (IP) to Buy from Neutral on Friday. The firm increased its price target by 35% to $46 from $34, attributing the move to higher containerboard price forecasts for the remainder of 2026.

Analysts Reshuffle Consumer and Biopharma

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European consumer staples came under scrutiny from Deutsche Bank, which warned of structural disruption from major retailers and slowing consumer spending. The bank downgraded Beiersdorf AG (BEIG) to Sell, anticipating that European staples will underperform as inventory levels diverge from actual consumer demand.

In the U.S., Evercore ISI cut Chewy (CHWY) to In Line from Outperform with a $25 price target. The firm pointed to decelerating organic growth and the lack of a near-term catalyst for the online pet supplier, whose shares have fallen 45% over the past year.

HSBC issued a broad biopharma update on Thursday, downgrading Amgen (AMGN) to Hold from Buy. The bank stated the stock now trades near fair value after a period of strong performance. In the same report, HSBC upgraded Novartis (NOVN) to Hold from Reduce, suggesting the cycle of negative catalysts for the drugmaker has likely concluded.

European Real Estate Call

While U.S. markets were closed for Labor Day, Goldman Sachs initiated a notable pair trade in European real estate based on a thesis of rising interest rates and inflation. The bank upgraded French REIT Covivio (CVO) to Buy, highlighting its resilient hotels division, while downgrading Germany's Vonovia (VNAn) to Neutral, citing pressure from higher borrowing costs and regulatory uncertainty.