BofA Bullish On Allegion, Says Company Should 'Continue Gaining Share In Key Channels'

Allegion PLC ALLE hosted its analyst day Tuesday with senior management presentations led by CEO David Petratis.

The key takeaway from the meetings is that the company continues to focus on increasing its presence in electronics and expanding its channel presence, according to Bank of America Merrill Lynch. 

The Analyst

BofA's Andrew Obin maintains a Buy rating on Allegion with an unchanged $102 price target.

The Thesis

Allegion is especially focusing on the U.S. discretionary retrofit channel, where it has historically been underrepresented, Obin said in a Wednesday note.

The company’s market share has increased to low double-digits from mid-single digits some years ago, the analyst said. 

Allegion said excess profits are being deployed for channel investments. This creates “an earnings cushion moving forward," Obin said. 

The company also indicated its focus on growing electronics across all regions, which will become a key growth driver going forward, the analyst said. Allegion’s M&A over the past five years has enabled it to develop new products, with recent innovation focused on digitizing products and electromechanical convergence, he said. 

“In our view, management’s commentary on commitment to electronics supports ALLE being able to keep up with growth and continue gaining share in key channels." 

Price Action

Allegion shares were down 0.58 percent at $88.85 at the time of publication Thursday. 

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