Carrier Global (NYSE:CARR) shares rose more than 3% intra-day today after Citi analysts upgraded the company to Buy from Neutral, raising their price target to $74 on the stock.
The upgrade is based on several key factors and assumptions. They project an expected EPS of $3.10 in 2025, translating to a price target of $74, which is based on a 24x multiple of the expected EPS.
The analysts anticipate that Carrier Global will be largely through its transformation process by the start of 2025, positioning it as a focused “pure play” HVAC company with an improving valuation multiple. They acknowledge the known headwind from Viessmann’s weakness, which accounts for approximately mid-teens percentage of Carrier’s projected fiscal 2024 revenue. However, they expect that synergies from the Viessmann acquisition and broader productivity initiatives will largely offset this weakness.
The analysts forecast that core markets for Carrier should grow at mid-single digits over the next few years, with the U.S. residential and global transportation sectors reaching a bottom while the commercial HVAC sector remains robust. While the analysts note that Carrier is still a work in progress and improvement may not follow a straight line, they commend the company for being well-managed with a leading market share in a highly favored end market, seeing potential for further upside.