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Carrier Global (NYSE:CARR) on Monday was upgraded to Outperform from a previous investment rating of Neutral by analysts at financial-services firm Baird. They said the maker of heating, ventilation and air-conditioning equipment is poised for gains after being undervalued compared with peers.
Carrier’s (CARR) stock rose 2.5% in premarket trading Monday.
“We see several catalysts over the next 12-18 months including asset sales, more aggressive capital deployment and reaccelerating US residential trends, and believe there are levers for longer-term multiple expansion (including reconfigured portfolio, capital deployment, execution),” Timothy Wojs, analyst at Baird, said in a July 15 report. “Europe remains a key risk, but rest of the portfolio performing well/improving.”
Carrier (CARR) is in the process of divesting its residential and commercial fire-safety equipment business. Baird estimates that the sale price will be $2 billion, and that Carrier (CARR) will see proceeds of $1.5 billion from the transaction.
The analysts also foresee the possibility of more stock buybacks and improved sales of U.S. residential HVAC equipment.
Baird raised its price target on Carrier (CARR) to $75 a share from $64 a share previously, based on an estimated multiple of 15.5 times next-12-month (plus one year) earnings before interest, taxes, depreciation and amortization, and an earnings per share multiple of 22.5 times for the same period.