Stifel raised its price target on AO Smith (NYSE: AOS) to $85.00 from $80.00 and reiterated a Buy rating following the company's fourth-quarter 2025 results. The action comes against a backdrop of mixed financial performance: earnings per share outpaced analyst expectations while revenue and forward guidance fell short of consensus.
AO Smith's shares traded near $72.93 at the time of the report. InvestingPro analysis referenced within available data suggests the stock is trading below its calculated Fair Value, a valuation signal cited alongside the analyst move.
In the fourth quarter AO Smith reported EPS of $0.90, exceeding the analyst consensus of $0.84 and delivering a roughly 7.14% positive surprise for investors. Revenue in the period totaled $912.5 million, however, which did not meet the forecasted $928.11 million and contributes to the assessment of the quarter as mixed.
Looking ahead, Stifel noted that AO Smith’s revenue guidance for 2026 came in under expectations and that the midpoint of the company’s EPS guidance also missed consensus forecasts. Despite the softer outlook, the firm maintained its Buy call and nudged up the price target.
Stifel highlighted the strategic potential of AO Smith’s acquisition of Leonard Valve, suggesting the deal could create pathways for further purchases in adjacent Water Management segments and thereby provide a longer-term growth opportunity. The analyst also pointed to a continued shareholder-friendly profile: a price-to-earnings ratio near 18.95 and a consecutive streak of dividend increases spanning 17 years, as noted in InvestingPro data.
Market reaction to the quarterly release drove AO Smith shares higher by about 5.3% on the session, compared with a 1.1% gain in the Industrial Select Sector SPDR Fund (XLI). Stifel suggested that part of this outperformance may reflect short covering despite the mixed nature of the company's results.
The juxtaposition of an EPS beat and revenue and guidance misses leaves AO Smith’s near-term outlook characterized by both resilience in earnings and uncertainty in top-line growth. Investors focused on industrials and water technology will likely weigh the implications of the Leonard Valve acquisition and the company’s guidance as they reassess expectations for 2026.