Investing.com - JPMorgan initiated coverage on AO Smith (NYSE: AOS ) Tuesday with a Neutral rating and a $70.00 price target.

The investment bank cited AO Smith’s position as a market leader in North American residential and commercial water heaters, operating in a fully penetrated, replacement-driven market.

JPMorgan based its Neutral stance on the company’s recurring demand profile, pricing discipline, and steady margin structure, according to the research note.

The firm highlighted that 80-85% of AO Smith’s demand comes from replacements, supported by a 14-year average residential product lifecycle and 5 years for commercial systems.

JPMorgan also noted that AO Smith’s broad product portfolio, which includes tank, tankless, and high-efficiency systems, enables pricing power, warranty differentiation, and market leadership in both residential and commercial segments.

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