Otis: 2025 Outlook Maintained Despite Tariffs, Weaker Macro
Company Update (OTIS US) (Buy): Otis’s resilience seems under-appreciated and undervalued at ~24x 2024 EPS.
Highlights
Shares are down from a year ago and just 3.4% above their 52-week low.
EPS growth targeted at 10%+ mid-term and expected to be 4.5-7% in 2025.
Service, 87% of EBIT, is resilient and not directly exposed to tariffs.
Q1 showed small organic growth in EBIT and 4.2% dollar-growth in EPS.
At $92.74, we see a 61% total return (14.1% p.a.) by 2028 year-end. Buy.
Introduction
We review our Buy rating on Otis after the release of Q1 2025 results on Wednesday (April 23). Shares fell 6.7% on the day, and are currently flattish (down 0.7%) from a year ago and just 3.4% above their 52-week low:
Otis Share Price (Last 1 Year)
Source: Google Finance (24-Apr-25).
We initiated our Buy rating on Otis in July 2020 and have included it in our “Select 15” model portfolio since the start of 2023, increasing it to a mid-sized position in January 2024. Otis shares have gained 72.0% in just under 4 years since our initiation and currently show a 14.8% gain in our model portfolio. We added modestly to our position on Thursday.
Despite Otis’s classification as an Industrial, we believe its earnings will be much more resilient in event of a recession than many investors appreciate, and the stock is undervalued. The updated 2025 outlook supports this view.
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