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Investing.com - Stifel raised its price target on A.O. Smith (NYSE:AOS) to $81.00 from $78.00 on Monday, while maintaining a Buy rating on the water heater manufacturer’s stock. According to InvestingPro data, the company maintains strong financial health with a GOOD overall rating and has raised its dividend for 16 consecutive years, demonstrating consistent shareholder returns.
The price target increase comes as A.O. Smith implements price increases of 6%-9% across most of its water heater products, which Stifel notes have historically been accretive to earnings per share. The company currently maintains healthy profit margins of 38% and operates with a moderate debt level, suggesting room for continued growth.
Recent data from the Air-Conditioning, Heating, and Refrigeration Institute (AHRI) showed sequential declines in April and May, though year-over-year growth remained positive, according to Stifel’s analysis.
The firm highlighted that A.O. Smith’s near-term results will likely be influenced by the volatile tariff situation in the second quarter of 2025, particularly from steel tariffs that have increased since the company’s last quarterly report.
Stifel also pointed to improving consumer sentiment in China as a positive sign that the market could be bottoming, while expecting A.O. Smith to maintain its current guidance.
In other recent news, AO Smith’s financial performance and strategic moves have garnered significant attention. Stifel has reiterated its Buy rating for AO Smith with a price target of $78.00, despite mixed data from the Air-Conditioning, Heating, and Refrigeration Institute showing a decline in residential water heater shipments. The recent data indicates a 2.2% month-over-month decrease but a 2.2% year-over-year increase in combined residential and commercial water heater shipments. UBS maintained a Neutral rating with a $74.00 price target, noting mixed results in China, where domestic water heater shipments rose 7% year-over-year in April. Meanwhile, AO Smith announced the appointment of Ming Cheng as the new Chief Technology Officer, succeeding Bob Heideman. Cheng brings extensive experience from his previous role at 3M Company (NYSE:MMM), where he led research and development efforts. These developments reflect AO Smith’s ongoing efforts to navigate global market conditions and enhance its leadership team.
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