Zacks Investment Research downgraded shares of Watsco Inc (WSO) from OUTPERFORM to NEUTRAL on October 05, 2012, with a target price of $84.00.
Watsco reported second quarter earnings per share of $1.15, up 6% year over year and revenues of $1.01 billion, which increased 15% year over year. However, both fell short of the respective Zacks Consensus Estimates. Watsco has immense potential in the replacement market of air conditioners and heating systems in the U.S, as nearly 89 million of them are more than 10 years old. Backed by its solid balance sheet, Watsco can continue to increase its dividend and make additional investments going forward. Watsco also stands to benefit from a recovery in the housing market. However, based on the lowering of its guidance due to profit issues at the Canadian joint venture with Carrier, we downgrade our recommendation from Outperform to Neutral with a target price of $84.00.
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