Jefferies Lowers PT On AOS To $46

Jefferies is lowering its price target on A.O. Smith Corp. AOS from $48 to $46 in light of meetings held with the company's CEO. In its report, Jefferies writes, “The CEO believes the NA water heaters market (78% of sales) may be flattish (in units) for an extended period. Presently, water heater shipments are nearly all replacement. The new product pipeline is extensive but has little traction given the market's conditions... Sales of resi water heaters in China (20%) should increase 10%+ in 2011. These sales are driven by household formations, not construction..” Jefferies maintains a Hold rating on the stock. AOS closed yesterday at $39.06.