On Wednesday, Stephens, a financial services firm, adjusted its stance on shares of Carrier Global Corporation (NYSE:CARR), downgrading the stock from Overweight to Equal Weight, while also raising the price target to $85.00, up from the previous $75.00.
The firm's assessment follows a period of significant growth for Carrier Global, with shares having risen more than 500% since the company's 2020 spin-off, outperforming the S&P 500's over 150% increase during the same timeframe. Year-to-date, Carrier's shares have rallied over 40%, compared to the S&P's more than 20% gain.
The revision in rating is attributed to the belief that the current stock price above $80 adequately captures the company's successful transformation into a leading climate-focused entity. This valuation comes after a series of strategic moves by Carrier, including a divestiture announced in mid-August, which led to a sharp rise in its stock price. Stephens now sees the stock's price-to-earnings ratio, adjusted for core 2025 earnings, at the higher end of Carrier's post-spin trading range and aligned with its industry peers.
Despite the downgrade, Stephens acknowledges Carrier's potential for earnings growth, which could be bolstered by the realization of synergies from its collaboration with Viessmann and a recovery in heat pump sales.
These factors could potentially lead to a higher earnings growth algorithm and further expansion of the company's stock multiple. However, at this juncture, Stephens has opted to adopt a neutral stance with the Equal Weight rating while recognizing Carrier's achievements with an increased price target.
In other recent news, Carrier Global Corporation has seen significant financial and strategic developments. The company's earnings exceeded expectations with an adjusted earnings per share (EPS) of $0.87, despite a 30% drop in Viessmann's sales, thanks to robust North American HVAC demand.
Furthermore, Carrier Global sold its Commercial and Residential Fire business to Lone Star Funds for $3 billion, marking a key step in its strategic transformation into a focused HVAC company. The sale is expected to generate an estimated $2.2 billion in net proceeds, which Carrier plans to allocate towards share repurchases.
In terms of analyst perspectives, Baird increased the price target for Carrier Global shares from $80.00 to $88.00, maintaining an Outperform rating on the stock. Meanwhile, RBC Capital Markets raised its price target on the stock to $79.00, continuing to recommend an Outperform rating.
On the other hand, Morgan Stanley initiated coverage on Carrier Global with an Equalweight rating and set a price target of $75.00, citing potential downside risks from a negative rate of change in the Light Commercial sector and a slower recovery for Viessman.
Finally, Carrier has initiated an $800 million tender offer to purchase its outstanding debt securities, aligning with its focus on managing its debt portfolio effectively. These are the recent developments that may interest investors.
InvestingPro Insights
To complement Stephens' analysis of Carrier Global Corporation (NYSE:CARR), recent data from InvestingPro provides additional context to the company's financial performance and market position.
Carrier's market capitalization stands at an impressive $73.67 billion, reflecting the significant growth noted in the article. The company's P/E ratio of 21.13 suggests a relatively moderate valuation compared to its earnings, which aligns with Stephens' observation that the current stock price adequately captures Carrier's transformation.
InvestingPro Tips highlight Carrier's strong financial performance, noting that the company has raised its dividend for 4 consecutive years and is trading at a low P/E ratio relative to near-term earnings growth. This supports the potential for earnings growth mentioned in the article, particularly in light of expected synergies from the Viessmann collaboration and potential recovery in heat pump sales.
The data also shows that Carrier has achieved a remarkable 55.61% total return over the past year, corroborating the article's mention of the stock's significant rally. Furthermore, with the stock trading at 97.95% of its 52-week high, it underscores Stephens' decision to adjust their rating to Equal Weight at the current price levels.
For investors seeking a more comprehensive analysis, InvestingPro offers 14 additional tips for Carrier Global Corporation, providing deeper insights into the company's financial health and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.