Industrial Technology & Distribution 3Q26 EPS Preview: Industrial Tech Capex Remains Strong, OSG Estimates Rises Again

Barclays retains a positive view on the Industrial Tech & Distributors sector. We expect our coverage to deliver 3Q26 sales +15% y/y and EPS +24% y/y and avg. +1% beat vs. consensus (2Q26 +11%, 1Q26 +10%). We believe we are still early cycle given just 9 consecutive months of the ISM New Orders index above 50, versus the typical cycle of a 30 month average (median 35 month). We are nearing mid-cycle, with MRO markets recently picking up. We now expect +12% organic sales growth (OSG) from our Industrial Tech hardware coverage (+10% in July). Our Industrial Tech Global Capex Model suggests +18% y/y growth in end market CAPEX (ex-hyperscalers) vs. +15% y/y in July, the strongest growth since 2021, led by semiconductor, A&D, supply chain & logistics. We still favor Short Cycle names CGNX, ZBRA, APH, TEL, ST, PI and WCC, and raise PTs for CGNX ($85), ZBRA ($416), PI ($200), WCC ($437) and SCSC ($51). We like MANH (OW) for Agentic AI and TRMB (OW) for its catalysts. We expect Q3 beats from A