11:57 AM EDT, 10/31/2024 (MT Newswires) -- Trane Technologies ( TT ) is expected to sustain above-market organic growth, driving positive revisions and valuation support, despite recent share price declines due to concerns about order slowdowns and implied deceleration, Morgan Stanley said in a note on Thursday.

"The organic growth profile is a true outlier vs broader industrials, and as the bifurcation in market outgrowth sustains, so should TT relative valuation," the firm added.

The company's order growth in the Americas was strong at 8%, driven by residential heating, ventilation, and air conditioning and transport. However, Asia-Pacific orders fell 30%, which was a clear negative surprise. This decline does not reflect market demand and is expected to improve sharply, according to the note.

The firm said that Trane Technologies' ( TT ) Q4 guidance appears conservative suggesting limited benefits from residential pre-buy activity and indicating potential upside if performance exceeds these conservative estimates.

Morgan Stanley said that Trane Technologies' ( TT ) strong growth and "long runway for margin expansion" justify a higher valuation multiple.

The firm forecasts Q4 earnings per share at $2.53, exceeding the $2.50 guidance. Additionally, Morgan Stanley is raising its 2025 and 2026 estimates to $12.86 and $14.48, respectively, up from $12.71 and $14.41, as confidence in underwriting high-single-digit organic growth increases.

The brokerage raised its price target on the company's stock to $445 from $425 and reiterated its overweight rating.

Shares of Trane Technologies ( TT ) were down more than 2% in recent trading.

Price: 367.56, Change: -7.96, Percent Change: -2.12