Otis Reports Mixed Second Quarter Due to Temporary Disruptions; Shares Fully Valued

Otis reported a mixed second-quarter 2022 for revenue, but still a solid profit margin with 20-basis-point margin expansion. Management modestly lowered upside on 2022 revenue growth guidance due to supply chain disruptions, as well as the impact of lockdowns in China. Management's guidance also now excludes new equipment revenue from Russia, which contributed 3.4% of new equipment sales and 1.7% of group sales in 2021. We revised down our forecasts modestly for Otis to account for supply chain and labor shortages, causing delays in 2022, order execution, as well as Russia impairment costs. Our 2022 adjusted EPS forecast is now $3.19, down from $3.22. However, these near-term adjustments were not material enough to alter our long-term forecasts or $73 fair value estimate. We also maintain our wide moat rating.