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A Mizuho analyst has maintained a Neutral rating on Allegion (NYSE: NYSE:ALLE), with a price target of $135.00. The analyst's perspective follows recent investor meetings in Toronto with Allegion's CFO Mike Wagnes, Chief Accounting Officer Nick Musial, and VP of Investor Relations Josh Pokrzywinski.
The analyst expressed a continued appreciation for Allegion's strong business fundamentals, which include differentiated specification business and potential for market share gains, a growing electronic lock segment, and a focus on niche software solutions.
Despite these positives, the firm's stance on the stock remains unchanged since the downgrade to Neutral in February 2024, when the stock was trading around $130.
At that time, Mizuho had adjusted their price target from $141 to $135, citing a balanced risk/reward scenario. The stock's current price stands at $137, and while the company's strategy and business profile are considered sound, Mizuho's view has not shifted.
The analysis also acknowledged that lower interest rates could heighten investor interest in rate-sensitive sectors, such as building products. Some key discussion points from the meetings included Allegion's institutional segment remaining a strong point, the company's international pivot toward growth, and a strategic focus on bolt-on acquisitions.
In other recent news, security solutions provider Allegion reported an encouraging second-quarter performance with year-over-year growth in both residential and non-residential sectors.
The company announced an adjusted EPS of $1.96, reflecting an 11.4% increase from the previous year and surpassing analyst expectations. Revenue also rose to $965.6 million, a 5.8% increase from the previous year, exceeding consensus estimates.
However, Mizuho Securities has adjusted its outlook on Allegion shares, reducing the price target to $135 from $141 while maintaining a Neutral rating. The decision reflects concerns over lower market multiples and uncertainty in end markets.
Despite this, Mizuho raised its earnings per share (EPS) estimates for 2024 and 2025, citing Allegion's strong operational execution.
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