Wells Fargo Initiates Coverage On 5 Building Products Stocks With Mixed Ratings - Trane Technologies (NYSE:TT), Carrier Global (NYSE:CARR), Johnson Controls Intl (NYSE:JCI), Allegion (NYSE:ALLE)

Wells Fargo analyst Joseph O'Dea initiated coverage of building products companies Johnson Controls, Allegion, Trane Technologies and Dover, and Carrier Global.
Johnson Controls International PLC JCI was initiated with an Overweight rating and a price target of $82, implying an upside of 16.9%.
O'Dea believes Johnson Controls can achieve its adjusted EPS CAGR target range of 18-21% announced at investor day. However, he thinks the company's 6%-7% organic revenue growth CAGR through 2024 "looks lofty" based on his end-market growth expectations.
He adds that the discount Johnson Controls has seen to HVAC peers has been "justified," but executing on its targets should strongly support better relative valuation for what looks "like a clear valuation outlier to HVAC peers on 2023 estimates."
Allegion PLC ALLE was initiated with an Overweight rating and a price target of $159, implying an upside of 21%.
The analyst wants exposure to Allegion's ability to grow mid-single-digits over the medium term. He mentions that the company has an "outgrowth opportunity" as electrification continues to penetrate residential and commercial markets.
Trane Technologies PLC TT was initiated with an Underweight rating and a price target of $163, implying a downside of 7%.
O'Dea says that Trane has been the best performing stock in the electrical equipment and multi-industry group since 2016, but the "past performance has over flexed the multiple."
He further says that the stock's "relative valuation bar" is too high for 2023. Assuming 2022 growth is mostly in current valuation, there's some risk as focus shifts to 2023.
Carrier Global Corp CARR was initiated with an Equal Weight rating and a price target of $51, implying a downside of 2.6%.
The analyst says that he currently sees the risk/reward on shares as balanced based on his relative valuation framework.
Wells Fargo analyst Saravana Raghavan initiated Lennox International Inc. LII with an Equal Weight rating and a price target of $310, implying an upside of 4%.
Raghavan mentions that sentiment across his group is the poorest on Lennox, driven by residential HVAC cycle concerns. However, he doesn't see a clear case for continued relative valuation squeeze; therefore, it's too early to get constructive, and downside risk at this point "isn't compelling enough."
Price Action: JCI shares are trading lower by 0.12% at $70.20, ALLE up by 0.20% at $131.77, TT lower by 1.33% at $174.69, CARR lower by 1.97% at $52.30, and LII lower by 2.34% at $296.85 on the last check Friday.

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