On Wednesday, Loop Capital adjusted its price target for Watsco (NYSE:WSO) shares, a major distributor of air conditioning, heating, and refrigeration equipment, to $440.00, up from the previous target of $415.00. Despite this change, the firm maintained its Hold rating on the stock.
The price target adjustment follows Watsco's second-quarter earnings per share (EPS), which fell slightly short of consensus expectations by 5%, although it was in line with Loop Capital's earnings forecast.
The earnings were impacted by lower part and supply sales, which affected both sales and product mix. However, these were largely counterbalanced by effective selling, general, and administrative (SG&A) expense management.
Loop Capital's revised estimates take into account the anticipated industry shift to A2L refrigerants and the continued strong demand for heat pumps. These factors are expected to support growth and gross margin improvement for Watsco into 2025.
The new price target of $440 reflects Loop Capital's slightly increased estimates. Yet, the firm indicates that there is limited potential for further stock price multiple expansion unless Watsco can demonstrate additional margin growth.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.