Baird analyst Michael Halloran said A.O. Smith shares have been under pressure and near-term trading is likely to remain challenging. The analyst said the pressure is driven by weaker China growth, North American residential cycle concerns, and the prospect for a lower longer-term growth rate. He said the shares are approaching an attractive entry point, but investors should be patient as near-term risks are likely to drive short-term underperformance. Halloran maintained his Outperform rating but lowered his price target to $58 from $68 on A.O. Smith shares.

Reports Q1 revenue $978.8M, consensus $995.97M. "A. O. Smith delivered a strong performance in the first quarter primarily driven by higher sales of our commercial high efficiency water heaters and lower steel costs in North America as we saw continued healthy water heater demand. We achieved sales growth of 6% in China, despite the ongoing macroeconomic challenges in that country, as our recently released kitchen products continue to be well received in the market," noted Kevin Wheeler, chairman and chief executive officer. "I am pleased with our global team's efforts in servicing our customers during the quarter."