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Investing.com - Lennox International (NYSE:LII) shares declined to $497.73, approaching their 52-week low, after KeyBanc Capital Markets reiterated its Sector Weight rating on the HVAC manufacturer, citing ongoing inventory challenges in the residential segment. According to InvestingPro data, 13 analysts have recently revised their earnings estimates downward for the upcoming period.
KeyBanc analyst Jeffrey Hammond maintained the neutral stance on Lennox following the company’s third-quarter 2025 earnings release and conference call, while simultaneously lowering estimates for the firm. Despite these challenges, the company maintains strong fundamentals with $5.4 billion in revenue and a healthy 33% gross margin.
The analyst noted that Lennox is experiencing the same weaker demand trends and de-stocking dynamics affecting the broader residential HVAC market, despite having held higher expectations for the company heading into the earnings report.
KeyBanc specifically pointed to Lennox’s projection that channel inventories would not normalize until mid-2026 as a key factor driving the negative market reaction to the earnings results.
Despite the stock’s decline of 13.57% year-to-date, the research firm characterized the market’s response as "overdone," suggesting the selloff might be disproportionate to the actual business conditions facing the HVAC manufacturer. InvestingPro analysis suggests the stock may be undervalued at current levels, with additional insights available in the comprehensive Pro Research Report, which covers over 1,400 US stocks.
In other recent news, Lennox International reported its third-quarter earnings for 2025, surpassing analysts’ expectations with an adjusted earnings per share (EPS) of $6.98, compared to the forecasted $6.93. However, the company’s revenue fell short of predictions, totaling $1.43 billion against an expected $1.5 billion. Following these results, Goldman Sachs lowered its price target for Lennox to $615, citing weaker-than-anticipated sales and margins in the Home Comfort Solutions division. Despite this, Goldman Sachs maintained a Buy rating on the stock. William Blair reiterated its Outperform rating on Lennox, even as the stock experienced an 8% decline due to weaker residential sell-through and extended inventory normalization timelines. The firm noted that inventory levels are not expected to normalize until the second quarter of 2026. This has resulted in downward revisions of EPS expectations for the fourth quarter of 2025 and the first half of 2026. These developments highlight the mixed outlook for Lennox as it navigates current market challenges.
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