Significant Miss on Softer GM%, Softer End Demand

研报英文原文证据摘录

Significant Miss on Softer GM%, Softer End Demand

Update

July 29, 2026 12:58 PM GMT

Morgan Stanley & Co. LLCMWatsco Inc | North America Christopher Snyder, CFA

Equity Analyst

Significant Miss on Softer GM%, Chris.Snyder@morganstanley.comChristine Yao +1 212 761-4470

Research Associate

Christine.Yao@morganstanley.com +1 212 761-4193

Softer End Demand Brandon Knutson

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

AlphaSignals Earnings Reaction Toby Okwara

Unchanged Meaningful shortfall Modest revision lower Toby.Okwara@morganstanley.com +1 212 761-1693

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

consensus EPS

Watsco Inc (WSO.N, WSO UN)

Source: Company data, Morgan Stanley Research

Multi-Industry | United States of America

Exhibit 1: Chart below tracks WSO 1H inventory build by year - 1H'26 inventory is Stock Rating Equal-weight

Industry View Attractive

+36% vs YE'25, roughly double the median ramp and tracking near 1H'25 levels Price target $405.00

Shr price, close (Jul 28, 2026) $367.51

(led to 30%+ OEM volumes declines in 2H). This supports our view that 1H'26 Mkt cap, curr (mm) $13,952

OEM volumes have been driven primarily by channel build, an industry risk into 2H. 52-Week Range $491.22-323.34

While this dynamic should aid WSO price / cost, the sharp Q2 GM% miss pushes

back on that view

Source: Morgan Stanley Research, Company Reports

WSO posted Q2 EPS of $4.00, significantly below Cons $4.44 and MSe $4.75 - a

much worse update than our constructive preview, which called for sizeable EPS

upside as price / cost tailwinds more than offset our broader concerns on R-

HVAC demand (link). The Q2 miss was broad-based: 1) Q2 topline +2% missed +4%

expectations, a negative update for both R-HVAC sell-through demand and WSO