Otis Worldwide Corporation (OTIS) reported better than expected second-quarter results driven by continued momentum and recovery in its end markets. Shares of the global elevator and escalator manufacturer hit an all-time high of $90.20 before closing up 0.6% at $89.06 on July 26.
In the second quarter, the company reported adjusted earnings of $0.79 per share, up 41.1% from the prior-year period, and beat the Street’s estimate of $0.71 per share.
Net sales increased 22.2% to $3.70 billion year-over-year and surpassed analysts’ estimates of $3.45 billion. The company operates through two main segments, New Equipment and Services, which grew 33.5% and 13.8% year-over-year, respectively. (See Otis Worldwide stock charts on TipRanks)
Judy Marks, President, and CEO of the company, said, “In addition to launching Gen3 and Gen360, our newest, innovative platforms with built-in IoT connectivity, we grew New Equipment orders by 24% and our industry-leading maintenance portfolio by 3%. We also delivered mid-teens organic sales growth with margin expansion in both segments.”
Based on the strong second-quarter performance, the company raised its guidance for full-year 2021 and also ramped up its share buyback program target to $750 million for the year.
Going ahead, the company forecasts full-year 2021 net sales and adjusted earnings to be in the range of $14.1 – $14.2 billion and $2.89 – $2.93 per share, respectively.
The Street’s estimates for net sales and earnings are pegged at $13.9 billion and $2.87 per share, respectively.
Following the results, Cowen & Co. analyst Cai Rumohr reiterated a Buy rating on the stock with a price target of $90, implying 1.1% upside potential to current levels.
Rumohr is impressed with the company’s results exceeding expectations on all metrics. Also, he believes that investors should be happy with the improved guidance and increased share buyback program.
Overall, the stock has a Strong Buy consensus rating based on 4 Buys and 1 Hold. The average Otis Worldwide price target of $88.75 implies 0.4% downside potential to current levels. Shares have gained 52.7% over the past year.
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