Baird has raised its price target for Lennox International (NYSE: LII) from $640.00 to $648.00 and kept a Neutral rating on the stock.
This increase reflects a modest estimate rise of 1-2%, influenced by a cautious outlook on the Residential sector but positive expectations for the Commercial segment.
Baird believes the investment risks and rewards for Lennox are fairly balanced, with the Commercial performance likely offsetting weaker Residential expectations.
Recently, Lennox reported an 8% rise in core revenue and improved margins, while raising its full-year EPS guidance to $19.50-$20.25. RBC Capital Markets also adjusted its price target for Lennox to $572, maintaining its Sector Perform rating.
Lennox has partnered with Samsung to boost heat pump growth in North America and reported a successful end to its residential HVAC destocking phase, leading to increased sales. Their new factory in Mexico is also contributing to growth.
The Home Comfort Solutions segment achieved record margins while the Building Climate Solutions saw a 15% revenue increase. Despite some economic headwinds, Lennox remains optimistic about product mix benefits and market share opportunities.
InvestingPro Insights
Lennox has shown impressive growth, with a 64.8% total price return over the past year and a 28.72% return in the last six months. Its EBITDA grew by 23.65% in the last year as of Q2 2024.
Lennox has paid dividends for 26 years and increased them for 14 years, showing commitment to shareholder returns. Despite Baird’s Neutral rating, the company has manageable debt and stable cash flows, but investors should be cautious as the stock is trading at high valuations.
For more detailed analysis, InvestingPro offers 16 additional insights into Lennox International’s financial health and market position.
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