- Oppenheimer analyst Noah Kaye initiated coverage on Lennox International Inc LII with a Perform rating.
- Lennox is implementing a segment realignment in North America under new leadership and has begun a process to sell its European commercial HVACR businesses.
- The analyst sees LII well positioned to resume share gains in NorAm residential HVAC through channel strength, e-commerce, and innovation capabilities.
- The analyst highlights the runway for heat pump penetration as an opportunity for Lennox.
- The company targets $100 million Commercial segment EBIT improvement from FY22 to FY25 through a combination of price/mix improvement, scale efficiencies, and capacity expansion.
- The analyst views recent positive inflection on production efficiency as encouraging and is tracking LII’s progress on migrating the majority of production to Mexico.
- The analyst said that the target FY26 margins (18-20%) laid out at LII’s 2022 Investor Day could be top-quartile among peers.
- The analyst views LII’s brand and channel advantages, strong corporate culture, and industry-leading ROIC positively.
- The analyst sees Lennox’s realignment and focus on winning in North America as likely to improve key financial metrics.
- The analyst monitors execution on long-term strategic goals (Residential share gains, Commercial recovery, margin expansion) and interim catalysts (e.g., Saltillo expansion, EU divestiture) amid cycle headwinds currently impacting organic growth and FCF generation.
- Price Action: LII shares are trading lower by 0.20% at $242.35 on the last check Tuesday.
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