UBS Maintains a 'Neutral' on Lennox International (LII); Trimming Estimates w/ 1Q Off to Slow Start

UBS maintains a 'Neutral' on Lennox International (NYSE: LII) price target raised from $33 to $38.

UBS analyst says, "Adjusted EPS was $0.48 (UBSe $0.50) adjusted for a lower tax rate. Revenue was broadly weaker, especially in Resi and Service, mostly on warm weather. Mix was better, with Resi down on par with 3Q levels despite a much tougher comp, evidencing some impact of LII-specific actions. EBIT margin was in line on lower SG&A which was -16% y/y despite adding K/W, evidencing cost discipline, lower variable costs."

"Our view on the stock: Shares have outperformed YTD, exceeding the R2 by almost 500bp, the XLI by 600bp. But with estimates likely to come down for 1Q/2Q, back-end loading any recovery, the stock at over 8x our 2012E EBITDA (historic range 6-10x), and some risk to volume/mix from possible EPA rule changes on R-22 refrigerant production, we think valuation is starting to look full."

For an analyst ratings summary and ratings history on Lennox International click here. For more ratings news on Lennox International click here.

Shares of Lennox International closed at $39.85 yesterday.

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