ITW Shares Slump 1.81% After Barclays Cuts Rating to Underweight; $310M in Daily Turnover Ranks 325th

Illinois Tool Works (ITW) closed 1.81% lower on August 14, 2025, with a trading volume of $0.31 billion, ranking 325th in daily turnover. The decline follows a downgrade from Barclays, which cut its rating to Underweight from Equalweight and set a $243 price target. The firm cited concerns that the market has already priced in a modest 1% revenue growth forecast for fiscal 2025, limiting upside potential despite ITW's strong financial stability and 29-year dividend increase streak.

Recent earnings results highlighted resilience, with Q2 revenue of $4.1 billion and EPS of $2.58 exceeding expectations. Stifel raised its price target to $261, while Truist Securities downgraded the stock to Hold due to valuation concerns. Analysts noted ITW’s 26.19% operating margin and $1.5 billion share repurchase plan as positive signals, though risks remain tied to margin compression from tariffs and uneven industrial recovery.

The Construction Products segment, accounting for 14% of revenue, showed mixed performance in Q2, with a 6% global revenue decline offset by improved operating margins. Barclays emphasized that ITW’s recovery may lag the manufacturing sector unless construction demand or consumer spending rebounds significantly. The stock’s 23.3x P/E ratio and 17.25% free cash flow margin suggest reasonable valuation, but the market appears pricing in a slow-moving recovery.

A backtest of a strategy buying the top 500 volume stocks daily and holding for one day from 2022 to 2025 showed a 31.52% total return with a Sharpe ratio of 0.79. The highest single-day gain was 4.43% on March 24, 2023, while the worst loss was -3.08% on December 13, 2022.