Otis Worldwide Corp | North America Q2 + 2H Downside on Service Margins

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Otis Worldwide Corp | North America Q2 + 2H Downside on Service Margins

Update

July 22, 2026 11:46 AM GMT

Morgan Stanley & Co. LLCMOtis Worldwide Corp | North America Christopher Snyder, CFA

Equity Analyst

Q2 + 2H Downside on Service Chris.Snyder@morganstanley.comBrandon Knutson +1 212 761-4470

Brandon.Knutson@morganstanley.com +1 212 761-4168

Margins Toby Okwara

Toby.Okwara@morganstanley.com +1 212 761-1693

AlphaSignals Earnings Reaction Christine Yao

Research Associate

Strengthens our thesis Modest shortfall Meaningful revision lower Christine.Yao@morganstanley.com +1 212 761-4193

Impact to our thesis Financial results versus consensus Direction of next 12-month

consensus EPS

Otis Worldwide Corp (OTIS.N, OTIS US)

Source: Company data, Morgan Stanley Research

Multi-Industry | United States of America

Exhibit 1: While OTIS higher investment is having a positive impact on company Stock Rating Equal-weight

Industry View Attractive

topline growth, it is not translating to positive operating profit / EPS growth. As we Price target $88.00

Shr price, close (Jul 21, 2026) $71.95

look into 2027, we continue to see downside risk to Consensus calling for a return Mkt cap, curr (mm) $28,032

to 25%+ Service margins given required investment + outgrowth from the margin- 52-Week Range $101.14-69.16

dilutive mod business.

Source: Morgan Stanley, Company Reports

OTIS posted Q2 EPS of $1.01, below Cons $1.03 but topping MSe 99c on below the

line items (other, shares) as operating profit matched our model (3% miss vs Cons).

While a 2H cut was anticipated by the market, the reason we previewed OTIS

negative (link) is that we saw Service margin downside as a negative signal for

2027 revisions and thought this would become clear to the market post Q2 EPS -

and that is what we got.