Elevating Wide-Moat Otis as Our Elevator OEM Top Pick Following 30% Fair Value Estimate Boost

We’ve lifted our fair value estimate for Otis Worldwide by 30% to $95 per share following a transfer of coverage and a fresh look at our long-term thesis. We are more positive on the secular growth opportunity in elevator modernization that awaits Otis and its major original equipment manufacturer peers in the coming decade. This opportunity is immense—about half of Europe’s and North America’s elevators are more than 20 years old and therefore ripe for modernization—and offers a timely offset to the earnings headwind posed by the likely structural slowdown in new elevator installations over the coming decade. Otis is our top pick from our elevator OEM coverage, trading at a 7% discount to our revised fair value estimate. We’re attracted to Otis’ enviable elevator service portfolio, which is the industry’s largest with an installed base of 2.2 million units under maintenance globally.