On Thursday, Mizuho Securities adjusted its outlook on Allegion (NYSE:ALLE) shares, a company specializing in security products and solutions. The firm's analyst reduced the price target for Allegion to $135 from the previous $141, while maintaining a Neutral rating on the stock. The revision follows Allegion's second-quarter performance, which showed year-over-year growth in both residential and non-residential sectors.
Allegion's electronic locks experienced a low single-digit decline but reported a positive comparison on a two-year stack, with approximately a 38% increase versus a 28% increase previously. The analyst noted that electronic locks are expected to face easier comparisons in the second half of the year.
Allegion's recent performance has been bolstered by a combination of favorable pricing, cost management, and productivity, leading to better-than-expected results against lower initial projections.
Despite the positive operational execution, Mizuho expressed caution regarding the full-year outlook for the residential sector. However, some optimism is drawn from increased builder sentiment and normalized ordering patterns.
Based on Allegion's strong operational execution, Mizhuo raised its earnings per share (EPS) estimates for 2024 to $7.23, up from $7.07, and for 2025 to $7.55, up from $7.46.
The decision to lower the price target to $135 reflects concerns over lower market multiples and uncertainty in end markets. Allegion's performance in the upcoming half of the year will be closely monitored as the company navigates through changing market conditions and aims to maintain its growth trajectory.
In other recent news, Allegion US launched the Von Duprin 70 Series Exit Devices, a new line of security solutions. The company also reported a decrease in first-quarter revenue for 2024, totaling $893.9 million.
Despite this, Allegion has expanded its portfolio through strategic acquisitions of Unicel Architectural Corp., Krieger Specialty Products LLC, Boss Door Controls, and Dorcas. These developments are expected to enhance the company's offerings in the institutional market.
Allegion also introduced a smart lock integration with Airbnb (NASDAQ:ABNB), diversifying its product offerings further. However, Barclays (LON:BARC) downgraded Allegion's rating from Equal-weight to Underweight due to potential challenges in the US commercial construction sector. Allegion returned approximately $42 million to shareholders through dividends and share repurchases, reaffirming its 2024 outlook.
In addition, Allegion's shareholders approved several key proposals at the annual general meeting, including the election of all eight director nominees, the approval of executive compensation, and the appointment of PricewaterhouseCoopers as the company's independent registered public accounting firm for the fiscal year ending December 31, 2024. These are some of the recent developments in the company.
InvestingPro Insights
Allegion's steadfast performance and strategic cost management have caught the attention of investors and analysts alike. With a solid history of dividend growth, Allegion has not only raised its dividend for 10 consecutive years but also maintained dividend payments for 11 consecutive years, showcasing its commitment to shareholder returns. The company's ability to keep its liquid assets above short-term obligations further strengthens its financial stability.
Analyzing Allegion through the lens of InvestingPro data reveals a market capitalization of $11.14 billion and a P/E ratio standing at 20.22, which adjusts to 19.23 when looking at the last twelve months as of Q2 2024. While the company trades at a high Price/Book multiple of 7.82, its revenue growth shows a modest increase of 1.78% in the same period. Investors seeking to delve deeper into Allegion's financials can find a wealth of additional InvestingPro Tips, such as the three analysts who have revised their earnings upwards for the upcoming period, indicating a positive outlook on the company's financial prospects.
For those interested in gaining comprehensive insights into Allegion's investment potential, InvestingPro offers a total of 9 additional tips, which can be explored further by visiting https://www.investing.com/pro/ALLE. To enhance your investment analysis experience, use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, enriching your investment decisions with expert data and insights.
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