Allegion's Volume Growth Could Drive Re-Rating as Recovery Builds, BofA Says

MT Newswires Live10-23 23:10

Allegion (ALLE) is showing signs of an organic growth inflection that could support a higher valuation as improving volumes and stronger visibility into 2027 bolster expectations, BofA Securities said in a Friday note.

The company's Q3 Americas revenue rose 12%, with 9% organic growth driven by volume and pricing, while non-residential demand and data-center strength supported results, the firm noted. Adjusted earnings per share of $2.60 beat BofA's $2.48 estimate.

Management raised its 2026 organic growth outlook to 5% to 6% and adjusted EPS guidance to $9.05 to $9.10, prompting BofA to raise its 2026, 2027 and 2028 EPS estimates by 3%, 9% and 11%, respectively. The firm said its 2027 estimate is now 3% above consensus.

The firm expects growth to extend into 2027, supported by strong project specifications, data-center demand and a potential recovery in office and multifamily markets. Data centers also offer longer-term aftermarket opportunities, according to the note.

BofA upgraded its rating on the stock to buy from neutral and raised its price target to $200 from $164.

Price: 178.90, Change: +2.38, Percent Change: +1.35

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