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Investing.com -- Wolfe Research upgraded Otis Worldwide to Outperform from Peer Perform, saying improving new equipment orders and sales growth should help the elevator maker’s cash flow recover as 2025 winds down.
The brokerage said while fourth-quarter guidance risks remain and consensus estimates for 2026 could face small cuts, those concerns are already reflected in the stock.
It sees room for sentiment to turn more positive as China’s market stabilizes and order momentum picks up.
Wolfe said Otis’s new equipment business, which has been pressured by weak construction in China and Europe, appears near a bottom, while its service operations remain steady.
Improving order and sales growth could restore mid-single-digit organic revenue gains and boost free cash flow conversion.
Otis trades at about 21 times forward earnings, below its peers at 26–29 times, and Wolfe said that discount could narrow as growth improves. The firm called the company’s field-quality and retention initiatives another potential tailwind for cash generation.
The elevator and escalator maker has guided to 2025 earnings of $4 to $4.10 per share, though Wolfe said the fourth-quarter target may be conservative. It expects benefits from China savings and backlog conversion to offset seasonal weakness.