A.O. Smith upgraded at UBS on valuation, China stimulus

A.O. Smith (NYSE:AOS) on Wednesday was upgraded to Neutral from a previous investment rating of Sell by analysts at financial-services firm UBS. They said the maker of residential and commercial water boilers is more fairly valued after its stock underperformed peers and the broader market.

“Shares are assigning little value to the reverse osmosis water filtration business, where we are now incrementally positive on China government stimulus, notwithstanding a still challenging consumer and housing market backdrop,” Damian Karas, analyst at UBS, said in an October 23 report. “A.O. Smith’s (AOS) defensive attributes and strong balance sheet should help insulate earnings in a recession and may provide a valuation support around current levels.”

UBS raised its price target for A.O. Smith (AOS) to $80 a share from $75 a share previously, based on an estimated multiple of 18 times earnings for 2025 and 2026.