Oppenheimer has raised its 12-month price target on Trane Technologies (TT) to $468 from $460, while keeping an Outperform rating on the stock. The adjustment follows a quarterly report that topped consensus expectations for both top-line and bottom-line results.
Trane's shares have delivered a notable short-term gain, returning 10.32% over the last week. According to InvestingPro metrics cited alongside the results, the stock is trading above its Fair Value and carries a price-to-earnings ratio of 30.
Quarterly performance and bookings
In the fourth quarter of fiscal 2025, Trane reported adjusted earnings per share of $2.86, beating the forecasted $2.82 and registering a 1.42% surprise. Revenue for the same quarter came in at $5.15 billion, ahead of analyst expectations of $5.09 billion. Management also disclosed strong enterprise bookings during the quarter, a development Oppenheimer flagged as a positive indicator for underlying demand.
Following the earnings release, the stock moved higher in pre-market trading, reflecting investor reaction to the stronger-than-expected figures.
Guidance, backlog and commercial outlook
Trane issued fiscal 2026 earnings-per-share guidance that aligns with market expectations, while projecting higher sales for the year. The company highlighted a backlog that Oppenheimer says now includes $1 billion of work extending into fiscal 2027 and beyond. That backlog, combined with an Applied-heavy product mix, is expected to support margin progression and bolster future services revenue.
Oppenheimer noted that the backlog gives visibility for sequential acceleration in Commercial HVAC growth through fiscal 2026. The firm also indicated that the Applied-weighted mix should help margin trajectory and support services expansion over time.
Segmental caution and longer-term setup
Initial guidance for the company's residential and transport segments implies year-over-year declines. Oppenheimer characterized those projections as prudent given prevailing market dynamics and challenging first-quarter comparisons. The firm believes this conservative stance leaves room for recovery upside and positions Trane for growth acceleration in the second half of fiscal 2026 and into fiscal 2027.
Trane also reported annual revenue of $21.32 billion and retains a strong financial health assessment in InvestingPro's metrics, earning a "GREAT" overall score in the Building Products industry.
Dividend and shareholder returns
The company has maintained dividend payments for 55 consecutive years and reported 11.9% dividend growth over the last twelve months, underscoring a consistent shareholder-return profile.
Takeaway
Oppenheimer's price-target increase follows a quarter that beat expectations and included strong bookings and a material backlog. While the firm sees near-term caution in residential and transport, it views the outlook as conservatively positioned with potential upside later in fiscal 2026 and into fiscal 2027. Investors should weigh the recent rally and the stock's premium valuation against the visibility provided by backlog and elevated sales guidance.