Otis Q4 revenue misses on lower New Equipment sales

Overview

• Elevator maker's Q4 sales rose 3% but missed analyst expectations

• Adjusted EPS for Q4 missed analyst expectations

• Company repurchased approximately $800 mln of shares in 2025

Outlook

• Otis expects 2026 organic sales to grow low to mid-single digits

• Company anticipates 2026 adjusted EPS to rise mid to high single digits

• Otis forecasts 2026 adjusted free cash flow between $1.6 bln and $1.7 bln

Result Drivers

• SERVICE SEGMENT - Service net sales rose 8% in Q4, driven by higher volume, favorable pricing, and productivity gains, despite inflationary pressures

• MODERNIZATION ORDERS - Modernization orders increased 43% in Q4, boosting backlog and supporting future growth

• NEW EQUIPMENT CHALLENGES - New Equipment sales declined 5% in Q4 due to significant decreases in China and the Americas

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "hold" and the breakdown of recommendations is 6 "strong buy" or "buy", 9 "hold" and 1 "sell" or "strong sell"

• The average consensus recommendation for the heavy electrical equipment peer group is "buy."

• Wall Street's median 12-month price target for Otis Worldwide Corp is $101.50, about 12.1% above its January 27 closing price of $90.55

• The stock recently traded at 20 times the next 12-month earnings vs. a P/E of 21 three months ago

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