Parker-Hannifin: Be Wary Of Bad Guidance

JPMorgan has downgraded Parker-Hannifin Corp (NYSE: PH) to Underweight from Neutral on continued weakness of industrial production and the impact across the company's broad-end market exposure.

"Our Underweight rating is predicated on the fact that PH's revenues are highly correlated with industrial production; recent weak durable goods orders as well as expected extended shutdowns across several industries suggest downside to earnings estimates into FY'17," analyst Ann Duignan wrote in a note.

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The analyst noted given its June fiscal year-end, Parker-Hannifin will be one of the earliest companies to introduce guidance into calendar 2017.

"The negative trends across these industries highlight weak demand and thereafter lower production," Duignan added.

The analyst maintained FY'16 EPS estimate at$6.33, while cutting the FY'17 EPS estimate to $6.55 from $6.73 and FY'18 EPS estimate to $6.87 from $7.06.

Duignan also slashed price target to $98 from $110, which closed Friday's regular trading session at $105.91.