12:33 PM EST, 01/14/2025 (MT Newswires) -- A. O. Smith ( AOS ) benefits from its leadership in the replacement-driven water heater market, mix-accretive boiler growth, and expansion into water treatment and these dynamics are expected to continue driving core growth and margins, Oppenheimer said in a note on Tuesday.

The company's region-specific manufacturing model largely mitigates tariff risk and may prove to be a competitive advantage if 25% Mexico tariffs are imposed, according to the note.

The firm said that energy-efficiency regulations serve as growth catalysts for A. O. Smith ( AOS ) and 2026 requirements for high-efficiency commercial water heaters and proposed 2029 residential standards for heat pumps, are expected to create significant medium-term opportunities for the company.

"We also believe North American franchise value exceeds consolidated enterprise value -- in turn offering needle-moving upside potential on A. O. Smith-China recovery and the secular runway of A. O. Smith-India," the firm added.

Oppenheimer upgraded its rating on A. O. Smith's ( AOS ) stock to outperform from perform with a price target of $88.

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