Oppenheimer Monitors Lennox's Execution On Strategy Amid Cycle Headwinds; Initiates Coverage With 'Perform' Rating

Oppenheimer analyst Noah Kaye initiated coverage on Lennox International Inc LII with a Perform rating.
Lennox is implementing a segment realignment in North America under new leadership and has begun a process to sell its European commercial HVACR businesses.
The analyst sees LII well positioned to resume share gains in NorAm residential HVAC through channel strength, e-commerce, and innovation capabilities.
The analyst highlights the runway for heat pump penetration as an opportunity for Lennox.
The company targets $100 million Commercial segment EBIT improvement from FY22 to FY25 through a combination of price/mix improvement, scale efficiencies, and capacity expansion.
The analyst views recent positive inflection on production efficiency as encouraging and is tracking LII’s progress on migrating the majority of production to Mexico.
The analyst said that the target FY26 margins (18-20%) laid out at LII’s 2022 Investor Day could be top-quartile among peers.
The analyst views LII’s brand and channel advantages, strong corporate culture, and industry-leading ROIC positively.
The analyst sees Lennox’s realignment and focus on winning in North America as likely to improve key financial metrics.
The analyst monitors execution on long-term strategic goals (Residential share gains, Commercial recovery, margin expansion) and interim catalysts (e.g., Saltillo expansion, EU divestiture) amid cycle headwinds currently impacting organic growth and FCF generation.
Price Action: LII shares are trading lower by 0.20% at $242.35 on the last check Tuesday.

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