Lennox International (LII) PT Lowered to $450 at Morgan Stanley

Morgan Stanley analyst Christopher Snyder lowered the price target on Lennox International (NYSE: LII) to $450.00 (from $475.00) while maintaining a Underweight rating.

The analyst comments "Coming out of Q4'25, we lower our price target to $450 from $475 prior after updating estimates and marking-to-market our multiple. Our $450 PT is based on ~18.5x our CY'27 EPS estimate of $24.60. The multiple represents high teens % discount to the S&P, well below the LT average HSD % premium, as continued volume softness, slow end demand, under-absorption risk, and rising concerns around pricing drive derating. Premium pricing power and durable margin expansion has historically supported valuation, but we see risk ahead given outsized pricing in recent years, a softer demand environment, and elevated inventory levels, both in the channel and with OEMs. Estimates: We forecast 2026 EPS to $23.63, near the low end of the $23.50-$25.00 guide, as 1H'26 likely still faces continued destock headwinds, demand softness (replacement and new construction), and margin pressure as excess inventory leads to absorption headwinds. We model organic growth at +1.6%, (2-3% guide), driven by HCS (Resi) down 2%, offsetting BCS (Light Comm.) up 8%. Our EPS forecast aslo includes a ~2% M&A uplift from the NSI acquisition. For Q1'26, we forecast EPS at $3.35, 14% of full year vs. typical ~16%, as Q1 is likely pressured by continued destock and under-absorption. We model HCS organic down 12%, facing a tough comp after Q1'25 prebuy, and BCS organic up 8.5%, benefitting from an easy comp after 454B transition issues in Q1'25."

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