ABB (ABB)/(ABBN) reported 2018 results that were about 2% lower than our forecasts for revenue and earnings. However, we are maintaining our wide economic moat rating and $25.40 and CHF 25 fair value estimates. The company also announced a partnership with Dassault Systemes, which increases its exposure to higher-value industrial automation software with an offering more in line with that of Siemens and Schneider Electric. In addition, management proposed new medium-term targets of 3%-6% comparable revenue growth and 13%-16% EBITA margins, with the latter suggesting moderate upside relative to our current forecasts.
Group revenue grew at 4% and orders at 8% on an organic basis. The robotics division came in with better growth than we expected, up 11% for the fourth quarter and 8% for the year, about 200 basis points above our 6% forecast. The electrification division (low voltage) also posted good growth. The industrial automation division (process automation) posted just 1% growth, about half of what we expected. However, given the long-term potential for process automation and the recent partnership with Dassault, we see upside potential from the current base of business in that division. We think the shares are attractive for investors looking for exposure to longer-term industrial automation expansion.
Denise Molina, CFA does not own shares in any of the securities mentioned above. Find out about Morningstar's editorial policies.