Electrical Equipment & Multi-Industry: Pullback creates some modest mid-cycle catch-up potential; Downgrade DD, ITW to N; Moving to ratings on TT at OW, CARR at N

Following a recent transfer of coverage, we update our views on 16 EE/MI stocks. We downgrade DD (remove from Analyst Focus List) and ITW from OW to N, amidst concerns over decelerating Short Cycle Industrial demand into 2027. We move to ratings on CARR at N, and TT at OW. TT and RRX are our top picks. We adjust many price targets. On the sector, our view is mildly positive; we see scope for a catch-up bounce given the pullback (the median EE/MI stock has underperformed the S&P by >1000bps over the last 3 months), and likely positive estimate revision momentum at Q3 earnings. However, we think we are in a 'mid-cycle' stage of the industrial cycle, and valuations which are not cheap vs bond yields cap the degree to which EE/MI multiples can re-rate. We est. '27 median organic sales growth of 6%, after 7% in Q226.