Otis: Steady Rise Continued in Q4, Macro Improving

Company Update (OTIS US) (Buy)

Expanding Maintenance base and Modernization demand helped EPS grew 11.7% in 2023.

Highlights

• Adjusted EBIT grew 10.3% organically in Q4, due to structural drivers

• Maintenance units grew 4.2% in 2023; Modernization orders grew 17.8%

• Otis profits grew even in China, with its construction sector problems

• Input cost inflation has moderated; New Equipment market decline is slowing

• At $88.58, we see a 52% total return (16.0% p.a.) by end of 2026. Buy

Introduction

Otis released Q4 2023 results on Wednesday (31 January); shares have been flattish (- 0.5%) in the following 2 days.

We first published our research on Otis with a Buy rating in July 2020; since then shares have gained 65% in 3.5 years:

Otis Share Price (Since Spin Off)

Source: Google Finance (01-Feb-24).

Otis has also been part of our “Select 15” model portfolio since inception, gaining 16% in 2023 and contributing to the portfolio’s total return of 23.3% last year. We have just doubled the weight of Otis in the model portfolio in late Janua…