A. O. Smith’s Target, Estimates Cut at Wedbush; Shipments Disappointing (AOS)

Water heater maker A. O. Smith Corporation (AOS) on Monday saw its price target and earnings estimates lowered by analysts at Wedbush Securities.

The firm maintained its “Outperform” rating on AOS but cut its price target from $49 to $46. That new target suggests a smaller 34% upside to the stock’s Friday closing price of $34.23.

A Wedbush analyst commented, “Though the September 14 ‘s AHRI’s release of July water heater shipment data was clearly disappointing, recent checks indicate the decline appears to have been much less severe in August than July while comparisons also improve in September. Given these weaker numbers, offset by the earlier than expected closure on Lochinvar, we are reducing our Q3 and 2011 EPS estimate to $0.46 from $0.48 and to $2.13 from $2.15, respectively. Our 2012 EPS is now $2.98, down from $2.99.”

A. O. Smith shares were unchanged in premarket trading Monday.

The Bottom Line
Shares of A.O. Smith (AOS) have a 1.87% dividend yield, based on Friday’s closing stock price of $34.23. The stock has technical support in the $30 price area. If the shares can firm up, we see overhead resistance around the $38 price level.

A. O. Smith Corporation (AOS) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.2 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks, as well as a detailed explanation of our ratings system here.

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