A.O. Smith upgraded to Buy from Hold at Stifel

Stifel upgraded A.O. Smith to Buy from Hold with a price target of $98, up from $97. The shares fell 9% down after the company reported a largely in-line quarter and reaffirmed guidance, the analyst tells investors in a research note. The firm thinks investors were likely expecting an increase in margin guidance for the second half of 2024 from the sharp decline in steel prices in the first half which didn’t materialize. A.O. Smith’s margin tailwinds will materialize later in the second hassle of 2024 and into 2025 from lower steel prices, increased price, and tariff avoidance, contends Stifel. The firm views the shares as attractively priced after the decline.