Update shared on 28 Nov 2025
Fair value Decreased 1.61%Analysts have lowered their fair value price target for Watsco from $415.60 to $408.90. This change is attributed to ongoing demand risks and softer earnings projections reflected in recent research updates.
Analyst Commentary
Recent insights from street research have highlighted both opportunities and risks for Watsco as analysts reassess the company’s short-term trajectory. These takeaways reflect key themes around valuation shifts, earnings projections, and demand expectations in the current market climate.
Bullish Takeaways
- Some analysts remain cautiously optimistic about Watsco's long-term fundamentals, underscored by a still sizeable price target relative to sector peers.
- Despite recent challenges, the company’s diversified presence in the heating, ventilation, and air conditioning market is seen as a potential buffer against regional volatility.
- Stable ratings from certain quarters suggest ongoing confidence in management’s ability to navigate through near-term headwinds and execute on their broader strategy.
Bearish Takeaways
- Analysts cite a material earnings risk over the next two quarters, driven by a softer HVAC demand outlook and rough business conditions in key southern markets.
- Adjusted earnings estimates have fallen below consensus, reflecting concerns about an earnings miss in the upcoming quarters.
- There is little near-term optimism for demand improvement, with tough year-over-year comparisons expected to pressure both growth and valuation metrics.
- Recent price target reductions highlight increased caution on execution and sector headwinds that may limit upside in share price performance.
What's in the News
- William Blair downgraded Watsco to Market Perform from Outperform, citing a "sizeable" Q3 earnings miss and ongoing challenging conditions, especially in the South (Periodical).
- The firm cut Watsco's earnings estimates below consensus, reflecting limited optimism for near-term demand improvement (Periodical).
- Watsco is scheduled to hold its Analyst/Investor Day, which may provide further updates on company strategy and outlook (Key Development).
Valuation Changes
- Consensus Analyst Price Target has decreased from $415.60 to $408.90, reflecting a modest downward revision in fair value.
- Discount Rate has edged down slightly from 7.93% to 7.93%, indicating a marginal change in risk assumption.
- Revenue Growth projections have softened, moving from 3.73% to 3.69%.
- Net Profit Margin forecasts dipped minimally, from 7.82% previously to 7.80% now.
- Future P/E multiple has declined from 30.66x to 30.29x, signaling slightly lower valuation expectations.
Disclaimer
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