All You Need is the MAir That You Breathe (at the Right Price) - Initiate at PP Rating

Research evidence excerpt

All You Need is the MAir That You Breathe (at the Right Price) - Initiate at PP Rating

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OM Expansion ('26-'28) 366bps but risk/reward thro’ YE26 is now balanced.

Cash EPS 2026e $1.31 Potential Catalysts

Implied Cash P/E 38x Upside estimate revisions: Organic growth targets call for a ~5% CAGR through

Target Price $49 FY28, which we view as too low. If data center backlog continues to expand at its

current pace, then there could be meaningful upside to estimates.

Base Case M&A transactions at attractive ROI: We calculate that MAIR has $1.7bn of surplus

Organic Growth (CAGR: '26-'28) 4% capital in our base case, with a stretch to $3-4bn for the right opportunity without

OM Expansion ('26-'28) 247bps having to tap its valuable equity currency. This could add material upside to

estimates.

Cash EPS 2026e $1.17 US construction recovery: Madison is more of a market outgrowth story given

Implied Cash P/E 37x generally low penetration of its IAQ product portfolio. But a recovery in US

residential and commercial construction markets could accelerate growth. Target Price $43

Bear Case Potential Risks

Organic Growth (CAGR: '26-'28) 2% Corporate governance: Larry Gies owns 65% of the company and controls 95% of

OM Expansion ('26-'28) 134bps the votes. We generally see little risk of material selling given the 2-year lock ups for

key insiders, and we view their interests as fully aligned with public shareholders.

Ideally, we would prefer a larger slate of board directors (MAIR has 3 currently). Cash EPS 2026e $1.09

Margin shortfall: MAIR has elevated EBITDA margins and has a strong record of

Implied Cash P/E 23x

execution. But rising inflation and volatile tariffs are watch items, especially in the

Target Price $25

Residential segment.