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Investing.com - DA Davidson has reiterated its Neutral rating and $75.00 price target on AO Smith (NYSE:AOS), the water heater and boiler manufacturer. According to InvestingPro data, AO Smith currently trades at a P/E ratio of 20.1x with a market capitalization of nearly $10 billion, suggesting potential upside based on Fair Value analysis.
The firm’s analysis indicates demand remains relatively stable across both North American and Rest of World segments compared to its previous assessment. North American operations are benefiting from healthy boiler demand and a flattish outlook for overall water heater volumes, with price increases recently implemented. The company maintains strong financial health with a current ratio of 1.65 and operates with moderate debt levels.
Consumer demand in China continues to face challenges, according to DA Davidson. The firm notes that stimulus programs in China appear to be preventing further weakening in demand rather than driving a return to unit growth.
AO Smith has initiated a formal assessment of its China business, which DA Davidson characterized as a "welcomed" development. This strategic review comes amid the ongoing challenges in the Chinese market.
The firm also highlighted AO Smith’s balance sheet flexibility, noting that the company remains active with share buybacks. DA Davidson maintained its Neutral rating and $75 price target based on these factors. InvestingPro analysis reveals the company has maintained dividend payments for 17 consecutive years, with a current yield of 1.89%, while management continues aggressive share repurchases.
In other recent news, A.O. Smith Corporation reported robust financial results for the second quarter of 2025, surpassing Wall Street expectations. The company achieved an earnings per share (EPS) of $1.07, which was higher than the projected $0.98. Additionally, A.O. Smith’s revenue reached $1 billion, slightly exceeding the anticipated $994.93 million. This performance was driven by strong North American operations, particularly in the boiler segment. DA Davidson maintained a Neutral rating on A.O. Smith, with a price target of $75.00, following these results. The company reported $20 million more in revenue and a $13 million higher operating profit than DA Davidson had forecasted. These developments reflect A.O. Smith’s ability to outperform expectations, contributing to a positive outlook among investors.
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