A O Smith Corp: Stifel cuts target price to $70 from $76

Stifel has lowered its price target for A. O. Smith Corporation (NYSE: AOS) to $70 from $76, while maintaining a Buy rating. The adjustment reflects recent weak performance in the North American residential market, where demand has remained sluggish despite some resilience in commercial water heaters and boilers. According to Stifel, recent AHRI data showed a significant sequential decline in January, with modest improvement in February. The firm’s regression model also suggests that first-quarter 2026 North America revenue may fall slightly below consensus estimates.

Rising steel prices over the past few quarters have added pressure on input costs, raising concerns about inflationary impacts and pricing dynamics. However, AO Smith has maintained a strong gross profit margin of 38.83% over the last twelve months. The company has also demonstrated consistent pricing power, with a history of passing on inflationary increases to customers and maintaining dividend growth for 17 consecutive years.

In its most recent earnings report for Q4 2025, AO Smith exceeded EPS expectations at $0.90, though revenue came in below forecasts at $912.5 million. Investors will be watching closely for updates on the company’s strategic evaluation of its China business, which remains a key area of focus.