Barclays Reaffirms an 'Underweight' on Watsco (WSO); 3Q11: Resi HVAC Weakest End Market in Industrials, Few Catalysts in Sight
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Price: $313.06 +0.47%
Rating Summary:
6 Buy, 18 Hold, 3 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
6 Buy, 18 Hold, 3 Sell
Rating Trend:
Up
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Barclays reaffirms an 'Underweight' on Watsco (NYSE: WSO) price target cut $1 to $58.
Barclays analyst says, "WSO's 3Q results missed both our and street expectations as resi HVAC markets in the US remain depressed. FY2011 guide also lowered to $2.65-2.75 vs. previously implied ~$3.00 number and below consensus. HVAC is our least favorite end market and appears broken, not just cyclically, but old fashioned broken. Bottom line, consumers are just unwilling to spend on new, more expensive, higher efficiency units and demand destruction seems to be real (see IR, LII as well). Fragile consumer, depressed housing cycle, mix issues with R-22 vs. R-410a, preference of repair over replacement, and lower tax incentives just too many headwinds right now. Resolution of mix issues and R-22 loophole likely not corrected until 2013. We are lowering our 2012e EPS from $3.30 to $3.20."
"Few near-term catalysts in sight. M&A, other than Carrier assets, has slowed and 2012 summer replacement season not likely to be great, unless housing recovery is robust, unemployment falls, etc... Consumer interest in spending on HVAC is low."
For more ratings news on Watsco click here and for the rating history of Watsco click here.
Shares of Watsco closed at $56.46 yesterday.
Barclays analyst says, "WSO's 3Q results missed both our and street expectations as resi HVAC markets in the US remain depressed. FY2011 guide also lowered to $2.65-2.75 vs. previously implied ~$3.00 number and below consensus. HVAC is our least favorite end market and appears broken, not just cyclically, but old fashioned broken. Bottom line, consumers are just unwilling to spend on new, more expensive, higher efficiency units and demand destruction seems to be real (see IR, LII as well). Fragile consumer, depressed housing cycle, mix issues with R-22 vs. R-410a, preference of repair over replacement, and lower tax incentives just too many headwinds right now. Resolution of mix issues and R-22 loophole likely not corrected until 2013. We are lowering our 2012e EPS from $3.30 to $3.20."
"Few near-term catalysts in sight. M&A, other than Carrier assets, has slowed and 2012 summer replacement season not likely to be great, unless housing recovery is robust, unemployment falls, etc... Consumer interest in spending on HVAC is low."
For more ratings news on Watsco click here and for the rating history of Watsco click here.
Shares of Watsco closed at $56.46 yesterday.
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