JPMorgan upgrades Otis Worldwide, citing a more ‘stable' near-term outlook

CNBC

15-07-2025

Otis Worldwide may be poised to rally after a tariff-induced pullback in April and May, according to JPMorgan. The Wall Street investment bank upgraded shares of the elevator and escalator manufacturer to overweight from neutral and raised its yearend price target 8%, to $109 from $101. That implies about 9% upside from Monday's close. While Otis shares have outperformed the S & P 500 this year, rising 8% year to date, they came under pressure in recent months after the Trump administration announced sweeping reciprocal tariffs in early April. The stock slumped 7% in April and was down another 1% in May. "Following a bid for safety on the back of tariff concerns earlier this year, OTIS stock has lagged the sector, underperforming by 2000 [basis points] over the past three months and 1600 [basis points] in the past year," JPMorgan analyst Stephen Tusa wrote on Tuesday. "We see a stable near-term outlook, attractive in context of recent underperformance, with challenges in China [original equipment] more than offset by the service business that represents nearly 90% of profits." OTIS YTD mountain OTIS, year-to-date Tusa also sees the possibility of "modest" upside to Otis's own forecasts of the effect of tariffs and foreign exchange movements on its business, leaving its internal revisions "stable" relative to peers. Moreover, Otis is selling at a 5% discount versus the broader industrial sector, which could also provide an opportunity for investors. "We see a strong franchise in a fundamentally attractive global elevator industry that has moved beyond the experience of low growth and margin compression in its former life as part of a conglomerate," Tusa also wrote. Otis was spun out of the former United Technologies in 2020. JPMorgan's optimism is in contrast with a majority of analysts on Wall Street who are only lukewarm on Otis. Tusa is one of only three analysts out of 16 who rate Otis the equivalent of a buy, according to LSEG. Eleven analysts rate it a hold. Otis shares briefly rose as much as 1.4% in early trading Tuesday following the upgrade.