Friday, Mizuho Securities adjusted its outlook on Carrier Global (NYSE:CARR) shares, raising the price target to $65 from the previous $56, while keeping a neutral stance on the stock. The firm's update follows the recent completion of the Industrial Fire transaction, which resulted in a $1.425 billion inflow for Carrier.
The analysis by Mizuho takes into account various assumptions to align with the company's projected "core" earnings. Based on this, Mizuho forecasts Carrier's core earnings power to be $3.10 and $3.45 per share for the years 2025 and 2026, respectively. The firm emphasizes that the final segments to watch are the Commercial & Residential sectors, which are crucial for the company's future earnings and value.
Mizuho believes that Carrier is actively seeking a sale of these segments, a factor that has been included in their earnings analysis. The updated price target represents roughly 21 times Mizuho's revised earnings estimate for 2025. Despite the increase in the price target, Mizuho has made no changes to its earnings estimates for Carrier Global.
In other recent news, Carrier Global Corporation has made significant strides in its ongoing transformation. The company has finalized two major divestitures, selling its Industrial Fire business to Sentinel Capital Partners for $1.425 billion and its security business, Global Access Solutions, to Honeywell (NASDAQ:HON) for $4.95 billion. These sales are part of Carrier's strategy to streamline its operations and focus on its core businesses.
Citi, expressing confidence in Carrier's strategic transformation, has upgraded the company's stock from Neutral to Buy, setting a new price target of $74.00. This upgrade reflects Citi's belief in Carrier's ability to navigate known challenges and complete its transformation into a pure-play HVAC entity by 2025.
The company's financial performance in the first quarter of 2024 was robust, with a 17% increase in sales to $6.2 billion and a 44% rise in adjusted operating profit to $927 million. Additionally, Carrier's earnings per share grew by 19%, demonstrating its continued momentum.
Carrier plans to allocate the net proceeds from these sales toward reducing its debt, aiming to achieve a net leverage ratio of around 2 times by the end of 2024. The company also anticipates resuming share repurchases this year.
The process of selling Carrier's Commercial and Residential Fire businesses is also underway and progressing as planned. The company expects to close the sale of its Commercial Refrigeration segment by the end of the third quarter. Goldman Sachs & Co (NYSE:GS). LLC and J.P. Morgan Securities LLC have been serving as Carrier's financial advisors.
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