JPMorgan Downgrades AO Smith (AOS) to Underweight
JPMorgan analyst Tomohiko Sano downgraded AO Smith (NYSE: AOS) from Neutral to Underweight with a price target of $60.00 (from $65.00).
The analyst comments: “We are downgrading AOS to Underweight (from Neutral) and lowering our price target to $60, based on a 10.5x EV/EBITDA multiple. The rating change reflects a combination of lowered guidance, meaningful residential exposure, and a China outlook that has shifted from an anticipated 2H recovery to a ~15% sequential decline in 2Q. With more compelling risk/reward opportunities available elsewhere in our coverage, underscored by our concurrent upgrade of TKR. We continue to see long-term growth in the AOS story and view a potential China exit as a meaningful upside catalyst, but near term headwinds and relative opportunity cost drive our decision to step to the sidelines.”
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Shares of AO Smith closed at $57.97 yesterday.