Lennox International (LII) PT Lowered to $615 at Goldman Sachs

Goldman Sachs analyst Joe Ritchie lowered the price target on Lennox International (NYSE: LII) to $615.00 while maintaining a Buy rating.

The analyst comments "Lowering estimates on weaker Resi HVAC. LII reported 3Q25 segment EBIT that was -2% vs. Visible Alpha Consensus Data driven by weaker than expected sales/margins in Home Comfort Solutions partially offset by outperformance in Business Climate Solutions. The bottom line is that concerns on elevated inventories, particularly on Resi HVAC are likely to persist until 2Q26 as we've entered the shoulder season for cooling equipment and consumer demand was worse than expected in 3Q25. This resulted in 3Q25 sell-in/sell-through volumes down in the low-30s/low-20s for LII. While the company managed margins well this quarter, inventories on LII's balance sheet remain elevated (up > $300mn y/y despite sales down y/y) and management aims to reduce the total by $150-$200mn by 2Q26. We think this will likely result in weaker production, hampering HCS margins in 1H26. Also, given weaker demand near term, we have lowered our 4Q25 HCS volume growth to -26%. As a result, our FY25/FY26/FY27 EPS moves to $22.85/$24.25/$27.00. Overall, we view the guidance cut as a necessary reset heading into 2026 and remain Buy rated, as we believe we are close to a bottom on estimates and valuation is discounting a lot of negative news. We lower our 12-month PT to $615, implying a 2027E FCF yield of ~4-4.5%."

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