Carrier Declares Accelerated Share Repurchases Worth $500M; Shares Rise

Carrier Global Corporation (NYSE: CARR) revealed that it has entered into an accelerated share repurchase program (ASR) to repurchase $500 million of its common shares.

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Following the news, shares of the provider of HVAC (heating, ventilation, and air conditioning), refrigeration, fire, security, and building automation technologies worldwide gained 2.5% to close at $53.82 on January 4.

Other Details

Per the ASR agreement with Goldman Sachs (NYSE: GS), the company made a payment of $500 million to Goldman Sachs for an initial delivery of approximately 7.6 million shares.

The final number of shares to be repurchased will be based on the volume-weighted average price of the company’s shares during the term of the ASR, which is expected to be completed in the first quarter of 2022.

Carrier Global intends to finance the repurchases by utilizing a part of the sale proceeds of the Chubb business.

Under the company’s existing share repurchase program, $1.6 billion remains available as of December 31, 2021. Upon completion of the accelerated share repurchase program, $1.1 billion will still remain available under the program.

Dividend History

Less than a month ago on December 8, the company increased its common stock dividend by 25% to $0.15 per share.

The dividend is payable on February 10 to shareholders of record on December 23, 2021.

CEO’s Comments

CEO Dave Gitlin commented, “Today’s announcement demonstrates confidence in Carrier’s long-term strategy and commitment to delivering shareholder value through disciplined capital allocation.”

He added, “Our strong balance sheet, compelling free cash flow generation and net proceeds from the Chubb sale enable investments in organic and inorganic growth initiatives and capital returns to shareholders.”

Wall Street’s Take

Following the announcement, Barclays analyst Julian Mitchell increased the price target on Carrier Global to $65 (20.8% upside potential) from $62 and reiterated a Buy rating on the shares.

Mitchell forecast higher sales across various industries in Q4 aided by inflation. However, he thinks margins will remain compressed in the short term. Further, he thinks that the stronger U.S. dollar is an “emerging headwind.”

He also believes that the consensus estimates should be more “backend loaded” and his 2022 earnings estimates are modestly above consensus.

Consensus among analysts is a Moderate Buy based on 3 Buys and 7 Holds. The average Carrier stock price prediction stands at $59.30, implying 10.2% upside potential.

Bloggers Weigh In

TipRanks data shows that financial blogger opinions are 87% Bullish on CARR stock, compared to a sector average of 69%.

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