Mizuho raises Carrier Global stock rating to Outperform

On Friday, Mizuho (NYSE:MFG) Securities showed a renewed confidence in Carrier Global Corporation (NYSE:CARR) by upgrading the company’s stock rating from Neutral to Outperform. The upgrade comes with a maintained price target of $78.00, indicating a positive outlook for the company's stock performance.

The upgrade was prompted by the observation that Carrier Global's shares are trading at a significant discount to its HVAC peers, despite the company's robust free cash flow generation and growth algorithm. Analysts at Mizuho noted that the stock is currently valued at over a 25% EBITDA discount compared to similar companies in the HVAC industry, which they believe does not align with Carrier’s strong financials and market position.

While Mizuho analysts do not anticipate major revisions to the company's earnings per share (EPS) this year, they regard 2025 as a year of transition for Carrier Global. The company has completed transformative portfolio actions, and stock buybacks are already in progress, with plans for continuation next year. The analysts also highlighted Carrier’s understanding of the residual HVAC transition pre-buy and payback dynamics.

Carrier Global's Data Center business is expected to double, and the performance of Viessmann, another segment of the company's operations, is predicted to improve. The analysts expressed the view that the current valuation gap is too significant to overlook and that the management team has been executing exceptionally well through a period that has been both disruptive and transformative for the company's portfolio.

In other recent news, Carrier Global Corporation reported strong fourth-quarter earnings, exceeding analyst expectations. The company reported adjusted earnings per share of $0.54, surpassing the projected $0.49, and revenue of $5.15 billion. Although this was slightly below the consensus of $5.27 billion, it marked a 19% year-on-year increase, including 6% organic growth.

These results were largely driven by an 11% organic growth in Carrier's HVAC segment, particularly in Americas commercial and North America residential markets. However, the Refrigeration segment experienced a 6% organic decline due to reduced North America truck and trailer sales.

Looking ahead, Carrier projects adjusted earnings per share of between $2.95 and $3.05 for 2025, which aligns closely with analyst expectations of $2.99. The company also anticipates revenue between $22.5-23 billion, consistent with the $22.95 billion consensus estimate. These recent developments reflect Carrier's robust financial performance and positive outlook for the future.

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