Lennox's Impressive ROIC Amidst WFH Trends: Analyst Weighs In On Exposure Concerns
Portfolio Pulse from Lekha Gupta
RBC Capital Markets analyst Deane Dray initiated coverage on Lennox International Inc (LII) with a Sector Perform rating and a price target of $391. Despite benefiting from Indoor Air Quality and WFH trends, and having a ROIC of 35%, LII's 70% exposure to the residential market is seen as a concern due to higher interest rates and a weakening macroeconomic market. The company is also facing labor shortages, supply chain disruptions, and inflation.
August 17, 2023 | 5:58 pm
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Lennox International Inc (LII) is facing potential challenges due to its 70% exposure to the residential market, labor shortages, supply chain disruptions, and inflation. Despite these concerns, the company has a strong ROIC of 35% and has benefited from Indoor Air Quality and WFH trends.
The analyst from RBC Capital Markets has raised concerns over LII's significant exposure to the residential market, which could be negatively impacted by higher interest rates and a weakening macroeconomic market. Additionally, the company is struggling with labor shortages, supply chain disruptions, and inflation, which could put pressure on its margins. Despite these challenges, the company has a strong ROIC of 35% and has benefited from Indoor Air Quality and WFH trends.
CONFIDENCE 90
IMPORTANCE 80
RELEVANCE 100