Barclays sees brighter 2026 for multi-industry stocks but downgrades Pentair

Barclays analysts struck a cautiously optimistic tone on the U.S. multi-industry sector for 2026, forecasting a modest rebound in organic growth and earnings after a lackluster 2025, even as they maintained a Neutral industry view.

In a broad outlook published Dec. 4, the team led by Julian Mitchell said subdued investor expectations outside of datacenters and electric utilities could set the stage for stronger relative performance next year, helped by improving volume growth and fading tariff-related uncertainty.

The analysts downgraded Pentair (PNR) to Equal Weight from Overweight, lowering their price target to $115 from $127, arguing that recent margin gains are likely “near their peak” and that future upside will depend more heavily on top-line growth as restructuring benefits fade. They also raised estimates and targets for several electrical-equipment names -- GE Vernova (GEV), nVent (NVT) and Vertiv (VRT) -- citing robust datacenter demand, particularly for liquid-cooling technologies still early in adoption.

Barclays noted that 2025 has closely resembled 2024 from a demand standpoint: strength in datacenters, electric utilities, and aerospace, but muted or declining activity elsewhere as both B2B and consumer spending remained soft.

Despite heavy market enthusiasm around AI, onshoring, and electrification, the median multi-industry stock has fallen about 11% relative to the S&P 500 this year, with earnings forecasts little changed and valuation multiples slightly compressed.

Looking to 2026, analysts expect industry organic sales to accelerate from roughly 3.5% this year to about 5%, driven by improving conditions in depressed categories such as residential HVAC, on-highway trucks, construction machinery, test and measurement, and factory automation.

Operating margins are projected to rise by around 70 basis points, similar to 2025, as cost inflation stabilizes and tariff effects normalize. EPS growth for the sector is expected to reach the low double-digits, roughly in line with the long-term average.

Barclays’ screening work highlights a group of names that screen especially well heading into 2026, including Carrier (CARR), GE Vernova (GEV), Lennox International (LII), nVent Electric (NVT), Ralliant (RAL) and Rockwell Automation (ROK). By contrast, stocks such as Allegion (ALLE), Eaton (ETN), Illinois Tool Works (ITW), Otis Worldwide (OTIS), Pentair (PNR) and Roper Technologies (ROP) appear less compelling based on the firm’s blend of fundamental trends and valuation factors.