12:46 PM EDT, 04/05/2024 (MT Newswires) -- Eaton (ETN) has multi-year catalysts across datacenters, electric vehicles and other aspects of the energy transition that should help propel the stock in the coming years, RBC Capital Markets said in a note emailed Friday.

The brokerage upgraded the stock to outperform from sector perform and hiked its price target to $371 from $286, referring to Eaton as the "best large-cap way to play the current electrical supercycle." The company's New York Stock Exchange-listed shares climbed 3.3% in midday trade.

The power management company is tracking more than 330 megaprojects that each represent more than $1 billion in spending, according to RBC Global Industrials Research Co-Head Deane Dray.

These reflect an incremental $37 billion total addressable market and should catalyze Eaton's stock over a five-year runway, they said.

"Although we missed its sizeable run in 2023, we believe (Eaton) shares are still well positioned in the array of multi-year secular tailwinds driving the ongoing electrical super-cycle," Dray said.

RBC lifted its 2024 revenue target to $25 billion from a prior view of $24.88 billion and its 2025 estimate to $26.82 billion from $26.29 billion. Analysts on average are modeling for 2024 and 2025 revenue of $25.02 billion and $26.78 billion, respectively, according to a Capital IQ survey.

Earnings per share is now seen reaching $10.25 in the ongoing year, up from RBC's prior model of $10.20 and largely in line with the $10.27 Capital IQ-polled consensus. For 2025, the brokerage's EPS estimate was raised to $11.45 from $11.15, compared with the $11.48 Wall Street view.

Eaton is the best positioned in datacenter infrastructure of all the companies within RBC's coverage with attractive merger and acquisition opportunities, according to the report. Eaton's recent 10.8% compound annual growth rate datacenter outlook "could end up being conservative" and drive earnings upside, Dray said.

Price: 331.08, Change: +10.92, Percent Change: +3.41