Lennox: Pure Play on Air Filtration

06/11/2020 5:00 am EST

Focus: INDUSTRIALS

Jim Powell

Principal Analyst, Global Changes & Opportunities Report

Dealing with the Covid-19 virus will take many forms. One change that is likely to be part of nearly every safety upgrade is to use better viral filtration systems in air conditioners, furnaces, and air exchange equipment, explains Jim Powell, editor of Global Changes & Opportunities Report.

Schools and businesses are likely to be the first to upgrade their HVAC 11 equipment to new antiviral standards — but others will surely follow.

As production ramps up for the new products, prices should fall and spur even greater sales. The biggest market for HVAC upgrades is likely to be high rise office and apartment buildings.

The high Covid-19 infection rate in New York and other cities is being attributed to its high density population living and working in large buildings that don’t remove — or destroy — particles as small as viruses.

I think the owners of high rise offices and apartments will place a premium on slashing the Covid-19 infection rate to avoid losing their tenants.

Having good virus control will also make buildings much more attractive for future tenants — and allow their owners to charge higher rental fees. The greater energy efficiency of new HVAC equipment will be an added bonus that will help buyers reduce their long-term costs.

I think increasing demand for new anti-viral air filters, efficient air conditioners, furnaces, and other air-processing equipment, will be positive for Lennox International (LII) — a blue chip company that was founded in 1895.

The company produces HVAC equipment for commercial and residential customers in the US, Canada, and Europe.

Products include air conditioners, furnaces, indoor air quality equipment, comfort control products, and refrigeration units — all of which the company makes for most applications.

In many instances, all air filtration customers will need to do is upgrade their existing units — which will also increase revenues for Lennox.

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