Watsco 9% pullback an ‘overreaction’ to Home Depot deal, says William Blair

William Blair analyst Ryan Merkel notes that Watsco (WSO) shares are down 9% after SRS Distribution, part of Home Depot (HD), announced it will acquire HVAC distributor Mingledorff’s. There are “some negatives” for Watsco – namely losing out on one of the key Carrier (CARR) distribution assets left in the market and another well-resourced competitor in the HVAC distribution M&A landscape – but the firm believes the negatives “do not come close to justifying the sell-off,” says the analyst, who has a Market Perform rating on Watsco shares.