Lennox International stock price target lowered to $560 by UBS on weak demand

Investing.com - UBS lowered its price target on Lennox International (NYSE:LII) to $560 from $610 while maintaining a Neutral rating on Monday. The stock, currently trading at $504.32, sits near its 52-week low of $500.10, despite maintaining strong fundamentals with an overall "GOOD" financial health score according to InvestingPro analysis.

The firm cited a weaker-than-expected near-term demand outlook and headwinds to free cash flow as reasons for the adjustment. UBS has cut earnings estimates for Lennox’s core business by 4-5%, accounting for lower residential volumes in the fourth quarter of 2025 and first quarter of 2026. This aligns with broader analyst sentiment, as InvestingPro data shows 13 analysts have recently revised their earnings expectations downward. Despite these challenges, the company maintains a strong dividend track record, having raised payouts for 15 consecutive years.

The analyst report noted that channel inventory destocking is expected to persist into the second quarter of 2026, creating continued pressure on the HVAC manufacturer’s performance.

Partially offsetting these negative factors is the inclusion of the NSI HVAC acquisition in UBS’s calculations, along with future share repurchases. The firm now models $250 million in buybacks spread over 2026.

UBS indicated it continues to seek a more attractive entry point for the stock, waiting for improvement in the housing and homeowner purchase environment, while acknowledging Lennox should be well-positioned for market recovery due to its capacity expansion and distribution investments.

In other recent news, Lennox International reported its third-quarter 2025 earnings, surpassing analysts’ expectations with an adjusted earnings per share (EPS) of $6.98, slightly above the forecasted $6.93. However, the company’s revenue did not meet predictions, totaling $1.43 billion compared to the expected $1.5 billion. Goldman Sachs responded to the earnings report by lowering its price target for Lennox to $615, citing weaker-than-anticipated sales and margins in the Home Comfort Solutions division, although it maintained a Buy rating. KeyBanc Capital Markets reiterated its Sector Weight rating on Lennox, highlighting ongoing inventory challenges in the residential segment that could extend to 2026.

William Blair, on the other hand, maintained an Outperform rating on the stock despite an 8% decline, noting that inventory levels may not normalize until the second quarter of 2026. This has led to downward revisions of earnings per share expectations for the fourth quarter of 2025 and the first half of 2026. These recent developments reflect varied analyst perspectives on Lennox’s future performance amid current market conditions.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.