United Technologies Corp.(UTC) reports that their "revenues rose 6% organically to $14.9B, ahead of our $14.5B forecast, with the strongest gains at P&W (+12%) and Carrier (9%)…

UTC’s Order Book Is Now Coming To Life – In 4Q10, Carrier’s US residential HVAC orders rose 10% and com’l global HVAC orders climbed 20% (only Europe was lower) while com’l HVAC orders were up 14% in NA (aided by energy efficiency upgrades), com’l spares climbed 45% at P&W and 31% at HS.

New equipment orders rose 11% at Otis and F&S orders climbed 6%. Carrier’s Transicold orders rose 75%. UTC now expects NA com’l construction to turn up in late 2011 and accelerate in 2012…

Our target relative valuation 25% P/E premium to the market, (up from 20%), reflects the emergence of a significant recovery in UTX's NA commercial construction markets in late 2011 & 2012 and our belief that UTX will be able to achieve continued consistent double-digit earnings growth throughout 2011, with the potential for current revenue guidance of $56-$57B to be conservative in 2011.

UTC’s performance, while perhaps involving a few more components than normal, is unquestionably moving the right direction – solidly higher…

We are especially heartened by evidence that UTC’s businesses are beginning to receive initial orders from the emerging NA commercial construction upturn now widely expected to impact sales beginning late this year and accelerate throughout 2012 and beyond. This has significant positive volume leverage implications for several important UTC commercial businesses, including Otis, Carrier and F&S. While Otis’ operating margins at 23% are already exceptional, the potential to accelerate significant margin improvement already expected at Carrier and F&S (principally from new products and lower cost structures) could be very meaningful over the next 12-18 months.

We strongly believe the company’s current revenue guidance of $56-$57 billion for 2011 is likely to prove conservative, potentially by a significant margin and almost entirely due to better than expected organic growth.

With UTC’s cost structure now in the best shape to leverage incremental revenue than at any time in its past, we believe the ~30% of UTC’s sales in NA that will benefit from a recovery in commercial construction (as well as rapidly building interest (and sales) from building energy efficiency products) could prove a significant source of positive upside for the company over the next few years. This upside potential is one of the principal reasons we have lifted our target price and relative valuation.”