KeyBanc Raises Price Target on AO Smith (AOS), Lochinvar Acquisition Looks to Bring $0.40-$0.50 in Earnings

KeyBanc is reiterating its Buy rating on shares of AO Smith (NYSE: AOS) and is raising its price target from $47 to $51.

The company reported its Q2 results with EPS of $0.51, ahead of the Street by $0.01 and the firm by $0.04. Revenue increased 8 percent year-over-year to $405 million, topping the firms estimate of $397 million.

Currently AOS is working on closing the acquisition of Lochinvar, which is forecasted to add $0.10 to 2011's earnings and $0.40-$0.50 to 2012's earnings. The firm notes that it will not factor in the additions from the acquisition until it is finalized.

AOS condensed its 2011 EPS guidance to $1.95-$2.05, while the firm lowered its 2011 estimate by $0.05 to $2.05. It is maintaining its 2012 estimate of $2.40.

KeyBanc states that core water heater business in China is performing very well and that North American residential volumes remain soft.

For more ratings news on AO Smith click here and for the rating history of AO Smith click here.

Shares of AO Smith closed at $43.15 yesterday.

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