Lennox International faces a prolonged residential slump as consumers defer HVAC replacements, prompting a downgrade from Deutsche Bank despite strong commercial performance and a $444 price target.
Deutsche Bank downgraded Lennox to Hold with a $444 price target, citing delayed residential HVAC recovery and reduced FY2026 EPS guidance to $23-$24, while commercial segment grew 24%.
Deutsche Bank downgraded Lennox International to Hold, citing a delayed recovery in the residential HVAC market. While the company's commercial segment posted 24% growth, persistent weakness in the Home Comfort unit led management to lower its 2026 EPS guidance to a range of $23-$24.
The downgrade reflects concerns over the delayed recovery in residential HVAC volumes, which has pushed the expected turnaround into 2027 and forced a reduction in full-year EPS guidance.
Consumers are increasingly choosing to repair existing equipment rather than replace it, exacerbated by previous pull-forward demand from refrigerant regulation changes and high interest rates.