Salomon Ups Illinois Tool Works to 'Outperform'

Analyst David Raso likes the company's manufacturing prowess and upside earnings potential

Salomon Smith Barney upgraded Illinois Tool Works (ITW ) to outperform from underperform.

Analyst David Raso notes Illinois Took Works' manufacturing prowess perennially distinguishes it from other leading industrial stocks. He doesn't the think stock's premium valuation already fully accounts its high quality. Raso says the Street is missing the earnings per share upside potential in 2003 and 2004, which appears particularly attractive with the current "scarcity value" among large cap industrials. He also says his analysis shows a core margin upside, driven by a reduced drag from low-margin acquired sales.

Raso sees $3.46 2003 earnings per share, and $3.93 for 2004. He set a $71 target.

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