Execute, And They Should Come

研报英文原文证据摘录

Execute, And They Should Come

IdeaMwhile we understand investor skepticism with transitory execution missteps, at $30,

the market is effectively valuing P&S at a 0.5x turn EV/EBITDA discount to

peers, and giving little value to the ADI business, despite it generating over

$287M of standalone Adj. EBITDA in CY26 (MSe, inclusive of go-public costs).

Our new $45 price target for REZI reflects 14.4x our CY26 EPS of $3.12, which

includes a 20% execution discount on WholeCo peer multiples, while our ~$59 bull

case valuation is where we believe the combination of these entities (P&S RemainCo

+ ADIG) could trade post-spin.

Execution is the single most critical factor to a re-rating of this asset, and next

week's Analyst Days are an important opportunity for management to convey a

message of sustainable revenue growth, continued margin expansion, and

highlight why these entities are more valuable separated than enjoined, before

the August 3rd distribution date.

As separate businesses, we do believe there will be deeper management

oversight and greater impetus for consistency in improving fundamentals. The

separation of P&S and ADI Global creates two distinct, independently capitalized

companies, each with dedicated management teams, and focused singular strategic

mandates, which removes the complexity and competing resource allocation shared

between each business within the WholeCo structure. For P&S (RemainCo), CEO

Thomas Surran (currently President of P&S) and the rest of the management team

can now more clearly pursue the new product introduction cycle, manufacturing

efficiency roadmap, and 300–500 bps of gross margin expansion target over five

years with greater focus and more direct accountability to a standalone investor

base.