William Blair & Company initiated research coverage of Carrier Global Corporation (CARR $18.36), which develops and provides HVAC, fire and security, and building automation technologies. Based in Palm Beach Gardens, Florida, Carrier was spun out of United Technologies (now Raytheon Technologies Corporation) on April 3, 2020.
Analyst Nicholas Heymann estimated the company would generate adjusted earnings per share of $1.40 in 2020 and $1.60 in 2021, on sales of $15.6 billion and $15.2 billion, respectively.
"Carrier is a leading global provider of HVAC, refrigeration, and fire and security solutions for residential, commercial, industrial, and smart cold chain applications," Heymann said. "Recently, Carrier has announced significant material actions to enhance its liquidity and free cash flow generation because of the economic disruption caused by COVID-19. Carrier will now reduce its 2020 capital spending, has implemented new nonrecurring (variable) cost containment actions, and no longer plans to declare an annual dividend in the near term. Due to COVID-19, Carrier suspended its prior guidance for 2020. Carrier is working hard to balance weaker services and aftermarket parts sales for its commercial HVAC and F&S business along with temporary restrictions—now gradually being lifted—on new commercial construction and continued weakness at Transicold transit refrigeration."
Heymann continued, "The key question, in our view, is not if Carrier will experience an initial resurgence as economies around the world unlock. Instead, it is whether there will be a subsequent decline when structural changes regarding use of commercial and institutional space secularly decline and pending or possible new projects are delayed and excess space is ‘parked,' similar to surplus jets."
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Current Ratings Distribution (as of 5/11/20)
Outperform (Buy): 71%
Market Perform (Hold): 29%
Underperform (Sell): 1%
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Outperform (Buy): 20%
Market Perform (Hold): 9%
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