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Investing.com - AO Smith (NYSE:AOS) has implemented price increases of 6-9% on most water heater products, according to UBS analysis, though the company has not yet incorporated these changes into its sales guidance.
UBS analyst Damian Karas maintained a Neutral rating and $74.00 price target on AO Smith in a recent research note. The firm’s Water Heater Price Tracker for May shows retail tank prices have increased approximately 6% over the past two months, with AO Smith specifically raising prices by about 8%.
The price increases come amid a combination of country import tariffs and steel cost inflation affecting the water heater industry. UBS noted that pricing among the "big 3" original equipment manufacturers has varied in magnitude and timing, with AO Smith implementing the highest and earliest increases, Rheem in the middle, and BW the lowest and latest.
Despite the price increases, AO Smith has maintained its sales guidance at 0-2% year-over-year growth. UBS suggests the company could ultimately raise its sales guidance by approximately low single digits percentage points.
The easing of China tariff rates since the first quarter and USMCA exemptions create uncertainty about whether the pricing will fully hold through June, according to UBS. The firm indicates there could be offsetting impacts to 2025 earnings from metals inflation, but potentially a modest net benefit to 2026 earnings and beyond.
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