JPMorgan cuts Resideo stock rating to neutral, slashes target to $16

On Tuesday, JPMorgan analysts downgraded Resideo Technologies (NYSE:REZI) stock from Overweight to Neutral, significantly reducing the price target to $16.00 from the previous $31.00. The downgrade comes amid a challenging period for the stock, which has declined over 24% in the past six months. According to InvestingPro data, the company’s current market valuation suggests potential upside based on its Fair Value analysis. The firm expressed concerns over the company’s exposure to tariffs and sensitivity to the residential housing market, which could impact its financial outlook.

The analysts highlighted that approximately 50% of Resideo’s Products & Solutions (P&S) are manufactured in Mexico, and its Snap One proprietary brands are produced in China. These factors make Resideo particularly vulnerable to tariffs. While the majority of products made in Mexico might be covered under the USMCA, which could mitigate some tariff impacts, the uncertainty surrounding tariff policies poses a risk.

JPMorgan maintained its first quarter estimates for Resideo at the midpoint of the company’s guidance. However, they have adjusted their 2025 revenue expectations from the midpoint to the lower end of the guidance range and reduced their 2025 adjusted EBITDA forecast to $700 million, which is below the company’s projected range of $725-805 million.

The analysts noted that it is challenging to quantify the exact impact of tariffs on the company’s gross margin, which they describe as a "moving target." Despite this, they expect the P&S gross margin to remain flat at 41% in 2025, down from the previously anticipated 43%. The report suggests that there is a higher risk of downside than upside for the gross margin.

The downgrade to Neutral reflects the limited visibility on the outcome of tariff negotiations and ongoing challenges in the residential housing market, which has been further complicated by the recent surge in interest rates. According to JPMorgan, Resideo is the most directly affected by tariff changes within their coverage area, leading to a more cautious outlook on the stock. With earnings scheduled in 14 days, investors seeking deeper insights can access comprehensive analysis through InvestingPro’s detailed research report, which includes additional ProTips and advanced financial metrics for informed decision-making.

In other recent news, Resideo Technologies, Inc. has announced a significant change in its executive team. Michael Carlet, who has been serving as Executive Vice President and Chief Financial Officer, will now also take on the responsibilities of principal accounting officer. This change comes after the departure of Tina Beskid, who was the Senior Vice President and Chief Accounting Officer. Beskid’s exit marks a transition in Resideo’s financial leadership. The company has not disclosed reasons for her departure or any changes to executive compensation. Carlet’s long-standing experience with Resideo is noted in prior SEC filings. This executive shift is part of Resideo’s ongoing commitment to corporate governance. Investors and stakeholders may be interested to see how Carlet’s expanded role impacts the company’s financial strategies and reporting.

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