Otis; structural tailwinds give modest upside to defensive company

Otis is the leader in market share for the elevator and escalator industry, and generates more than 65% of its revenue from its services segment, benefiting from a massive asset base that generates predictable, recurring revenue. The company has industry leading-margins and maintains exposure to a profitable US market, while maintaining a more aggressive balance sheet than its conservatively managed European competitors. The company sits at the forefront of a global modernization cycle that Otis is in a prime position to benefit from.

The application of software and digitization within the company's products provide a structural tailwind to the company in the future. Additionally, an aging installed base of products paired with modernization across the industry provides another structural tailwind to propel the company's stable, long-term growth prospects.

The company benefits from its wide moat, supported by high switching costs, intangibles, and economies of scale. The stock currently has a consensus price target of $90.5, representing an upside of 26.24%.