AO Smith (AOS) PT Raised to $61 at Stifel on 3Q Report; ' Solid Print, Some Concern Over China Growth/Performance, but Should See 4Q Rebound'

Stifel raised its price target on AO Smith (NYSE: AOS) to $61.00 (from $59.00) while maintaining a Hold rating, following the company's third quarter earnings report.

Analyst Robert McCarthy comments, "Core beat by $0.03, with modest raise, strength in NA overall ops offset by some incremental price/cost headwinds in China and incremental investment there. AOS now expects to grow sales 11-12% (from 10-11% prior). 2017 EPS are now expect expected to be $2.12-$2.14 (vs. our previous $2.10 estimate and $2.11 consensus; $2.07-$2.11 prior). Predictable but solid quarter and nice nudge up to guidance. Some concern around China but we see rebound in profitability with 4Q, consistent with management. Further, Lochinvar assumptions could be conservative. All in, we believe this was a decent quarter with a likely solid 4Q print coming. Valuation for the moment continues to give us pause. Reiterate HOLD, $61, 26X our $2.35 2018 EPS estimate."

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