Watsco (NYSE:WSO) reported its Q3 results, with EPS of $4.03 coming in worse than the Street estimate of $4.40. Revenue was $2.04 billion, in line with the Street estimate.
Deutsche Bank analysts provided their views on the company, raising their price target to $294 from $284. While gross margins fell short of expectations, the analysts believe much of the shortfall was temporary in nature and do not see risk to 27% long-term gross margin levels. Incorporating Q3 commentary on volumes and profitability, along with some additional clarity around how SKU changeovers are going with respect to the January 1 SEER rating increase, the analysts raised their 2023 revenue growth expectations to 5% (vs. up 1% prior) and model gross margin of approximately 27%.
The analysts lowered their fiscal 2022 EPS estimate to $14.13 from $14.25 and raised their fiscal 2023 EPS estimate to $14.00 from $13.54.