奥的斯：管理层网络研讨会复盘。我们是否看到隧道尽头的微光？谨慎乐观是游戏的名字

Varun Govindaraj+1 917 344 8543varun.govindaraj@bernsteinsg.com U.S. Multi Industry & Electrical EquipmentOtis Worldwide Corporation Rating Outperform Price Target OTIS 97.00 USD Otis: Management webinar debrief. Do we see light at the end ofthe tunnel? Cautious optimism is the name of the game. We hosted Otis management - Judy Marks (CEO) and Cristina Mendez (CFO) - on a webinar todiscuss the strategic outlook for the company going forward. Paraphrased comments (plusBernstein perspectives) are laid out below. The big question investors had was whether management would cut the 2026 guide in 2Q. (management mentioned they do not expect to see surprises here vs. what they spoke aboutlast quarter) so we don’t anticipate there will be a miss. We have less certainty on the marginside; we still expect ~10 - 20 bps of margin expansion which gets us to a 2Q26 EPS of ~$1.0 per share (in line with consensus). Pricing initiatives expected to add $50M to the bottom line Management highlighted “evergreen” demand for modernization; a large aged stock ofbuildings offers long-term revenue creation opportunities (implying mid-teens growth forthe foreseeable future). Repair revenues also continue to show HSD to 10%+ growth, withmaintenance at LSD (3% service base growth, (4%) churn, 3% price). They acknowledgedthat ISPs are (and have been) a core part of the ecosystem but not the existential risk theyare made out to be. OEM moat continues to grow with data and digital; Otis ONE penetrationis still low vs. what it could be, and it offers the company far richer data to help commercialand service teams execute (and improve productivity) which an ISP is locked out of. On China,market continues to degrow but less than previous years. Expect to end the year 8% down onNew Equipment vs. 2025 where it was down 13%. We think there is potential for inflection, Investment Implications We rate Otis Outperform, Target Price of $97. DETAILS We hosted Otis management - Judy Marks (CEO) and Cristina Mendez (CFO) - on a webinar to discuss the strategic outlook forthe company going forward. Paraphrased comments (plus Bernstein perspectives) are laid out below. Context up front:Management acknowledged that the last year has been rough. China caught everyone by surprise giventhe sustained downturn and support from the government came later / differently from what was expected. The UpLifttransformation did not impact headcount on direct cost, but some cuts on the indirect side did cause disruption in 2025 (e.g.,roles that managed job scheduling were impacted). With that said, the leadership team seemed confident that the worst wasbehind them, and they are now fully focused on what lies ahead. Management expects industry growth over the next five Modernization:Data shows that there is a robust pool of demand; far more than can be immediately services and expectedto offer an “evergreen” tailwind. Management highlighted it will take them 20 years to work through everything (becausemodernization is still somewhat discretionary) and by the time they do the cycle reopens again. 9 Mn out of 22 Mn elevatorsglobally are more than 20 years old that offers support and visibility. Backlog continues to show strong growth. Business lookslike new equipment, but Otis expects operating margins for modernization to reach 10%; important to remember that thisalso creates pull through demand for repair and maintenance. Business is not at 10% operating margin yet, but expect to see Repair:Also a big tailwind to service revenues. Given age of elevator stock, anything that isn’t modernized will be break down(and need repair) more often. HSD to possibly 10%+ growth expected, very accretive to margins since repair is the highest Maintenance:Expected to grow LSD; 3% service base growth, (4%) from portfolio churn and 3% (potentially 4%) on the priceside which adds up to LSD. Legally mandated in most parts of the world, so highly predictable and stable demand. Marginssit between modernization and repair. 3% service base growth used to be higher (closer to 4%), but intentional call from Independent Service Providers (ISP) + Otis ONE:Management highlighted that ISPs are not new, but are expected tobe a part of the environment going forward. 55% of units globally serviced by ISPs. Significant concentration is in China; ex-China implies 35 - 40% are serviced by ISPs. This was higher than we expected to hear, but it also seems like this has been thestate of the industry for some time now. The shift is that there are some PE-led roll ups happening, but Otis still does not seeISPs operating at a national scale (more often than not they have a catchment area). Moat that protects high value contractsis data - every elevator being installed today + most modernization projects have Otis ONE capabilities installed. OEMs haveaccess to much better fault information and predictive analytics than an ISP would (because they cannot access the proprietaryplatform). Only ar