UPDATE: Stifel Starts AO Smith (AOS) at Buy
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(Updated - April 3, 2020 7:58 AM EDT)
(updated to add analyst comments)
Stifel analyst Nathan Jones initiates coverage on AO Smith (NYSE: AOS) with a Buy rating and a price target of $45.00.
The analyst commented:
- Markets have secular growth as the domestic installed base increases, which grows the replacement business, and accounts for approximately 80% of total domestic revenue.
- The domestic market structure is favorable with 3 companies (A. O. Smith, Rheem, and Bradford White) controlling 90%+ of the market, which leads to rational competition.
- The vast majority of the domestic business is sold through wholesale and retail distribution where suppliers have exclusive relationships with distributors that rarely change. We think this insulates the business from new entrants in the majority of A. O. Smith's businesses as new competitors lack significant channels to market.
Shares of AO Smith closed at $35.61 yesterday.
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