Industrial Companies Likely to Lift 2026 Guidance Despite Some Investor Concerns, Truist Says

01:02 PM EDT, 10/05/2026 (MT Newswires) -- Industrial companies are expected to raise their full-year financial guidance despite certain investor concerns as demand remains strong and broad-based, Truist Securities said Monday. A recent selloff in industrial stocks, which was driven by concerns over the durability of the power, data center and artificial intelligence-related spending, has created a constructive setup ahead of the upcoming quarterly results. Conversations with suppliers have indicated robust and broad-based demand, according to the brokerage. "Pressure from higher interest rates, and from elevated diesel and other input costs add to the near-term debate," Truist analyst Jamie Cook said in a note to clients. "While these are legitimate risks, we expect commentary to remain broadly constructive and full-year 2026 estimates to move higher." In the machinery space, Truist views Caterpillar (CAT) as still "one of the most debated names" in terms of the pace and size of earnings and backlog growth, it said. "Power demand continues to exceed expectations, with (Caterpillar) evaluating facility repurposing to expand backup-power capacity, suggesting demand continues to exceed expectations and strength in orders and backlog," Cook wrote. It is time to buy into farm equipment stocks, as investors are now focused on how strong the group's recovery will be, according to the note. While brokerage sees Deere (DE), in particular, to be "the most debated name on valuation," it said "current earnings are still below trough and operating leverage remains under-appreciated." Truist sees a positive setup for the multi-industry group, citing "nine consecutive months of expansionary (purchasing managers' indexes) and a strengthening relationship between robust orders and organic growth, which has lagged but should now accelerate and support positive incremental margins." Parker Hannifin (PH) and Ametek (AME) are "the highest-quality multi-industry names" as both companies "used their balance sheet flexibility to pursue strategic M&A during the downturn and should now begin realizing the earnings benefits," Cook said. Truist sees Quanta Services (PWR) as the highest-quality name in the infrastructure services group and positioned for "beats and raises, as well as double-digit backlog and earnings growth." "We remain constructive across industrials and continue to favor the power theme, but we expect the market to draw a sharper distinction in favor of quality companies with clear competitive advantages, above-average earnings visibility, and a credible path to higher earnings power," Cook wrote. "In other words, it is time to be more selective, with a bias toward quality." Price: 851.75, Change: +6.33, Percent Change: +0.75