UBS Trims Watsco (WSO) Price Target as Q3 Results Show Mixed Performance

Core Insights - Watsco, Inc. is recognized as one of the best dividend stocks to invest in, particularly noted for its performance over the past 52 weeks [1] - UBS has reduced its price target for Watsco to $390 from $425, maintaining a Neutral rating, following mixed Q3 results [2] Group 1: Financial Performance - In Q3 2025, Watsco reported revenue of $2.07 billion, a decrease of 4% year-over-year, while gross profit remained stable at $569 million [2] - Selling, General and Administrative (SG&A) expenses increased by 5% during the same period [2] Group 2: Market Position and Growth - Watsco operates as the largest distributor in the $74 billion North American HVAC/R market, which is characterized by high fragmentation [3] - The company has achieved an 18% compound annual total-shareholder return since entering distribution in 1989, driven by strong organic growth and over 70 acquisitions [3] Group 3: Financial Strength and Investment - Watsco maintains a robust financial position with over $640 million in cash and investments and no debt, enabling continued investment in growth initiatives [4] - The company is focusing on enhancing its technology platforms, which are actively used by more than 72,000 contractors, installers, and technicians [4] Group 4: Technological Advancements - Watsco is advancing AI-driven initiatives aimed at improving customer experience and operational efficiency [5] - The adoption of digital tools and data-driven solutions by contractors positions Watsco to capture additional market share [5]