After seeing a strong market reaction to the hiring of Bjorn Rosengren and the prospects for a meaningful strategic turnaround, a little more reality has set in regarding the scale of the challenges ABB (ABB) is facing, and the sell-side has shifted to a "show me" footing. The stock hasn't done poorly, but after a period of outperformance it has more or less kept pace with the broader industrial sector since my last article, outperforming Rockwell (ROK), but underperforming Emerson (EMR), Siemens (OTCPK:SIEGY), and Schneider (OTCPK:SBGSY) (though just slightly on the latter).
I am still bullish on what ABB can become, but I also acknowledge that path from here to there isn't smooth and the risks aren't minimal. ABB still has to prove itself where software and digitization are concerned, and I see a risk that more nimble rivals like Schneider, Siemens, and Rockwell will leave ABB behind as the company spends time on restructuring efforts instead of growth projects. Valuation still leaves some upside, but management's going to have to deliver in the relatively near future to maintain the momentum.
Read more here:
ABB Posts A Decent Quarter, But Questions Remain On The Self-Improvement Plan
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