Analyst Upgrades Cooper Industries, Cuts Rockwell

HARTFORD, Conn. (AP) — Cooper Industries Ltd. should grow modestly next year due to improving residential markets in housing, consumer electronics and cars, an analyst said Wednesday as he upgraded the electrical products and tools supplier.

Citi Investment Research analyst Jeffrey T. Sprague upgraded the Houston company to "Buy" from "Hold." Improvements in Cooper Industries' markets should offset "lagging weakness" in commercial construction and oil, gas and commercial aerospace markets, he said in a note to investors.

Sprague downgraded industrial parts maker Rockwell Automation Inc. to "Sell" from "Hold" to reflect what he sees "as too big of a disconnect in performance and valuation for companies that don't directly compete but have similar characteristics."

Cooper Industries relies less on new capital spending to achieve growth and is more strongly linked to rising and falling industrial activity, he said. In contrast, Rockwell Automation of Milwaukee, Wis., "is more dependent on line upgrades, capacity expansions and green field activity," Sprague said.

"With the world struggling with excess industrial capacity we find this a very important distinction," he said.

However, concerns about weak commercial construction weigh on Cooper Industries' share value, he said.

Still, about 70 percent of commercial activity is to retrofit buildings, he said. In addition, projects financed by federal stimulus money for energy-efficiency should materialize next year and help offset commercial pressure, Sprague said.

Shares of Cooper Industries rose 75 cents, or 2.3 percent, to $33.33 in morning trading while Rockwell Automation fell 69 cents to $40.51.