Stifel cuts Xylem price target to $140, maintains Buy rating

On Wednesday, Stifel analysts adjusted their price target for Xylem stock (NYSE:XYL), a leading water technology company, to $140 from the previous $150. Despite the reduction, they have maintained a Buy rating on the shares. According to InvestingPro data, Xylem maintains a GOOD financial health score, with analyst targets ranging from $114 to $174, suggesting potential upside from current levels. The adjustment comes amid expectations of a modest industrial recession in the United States, anticipated to occur in the second half of 2025 through the first half of 2026.

The Stifel analysts predict that Xylem’s diverse business segments will experience varying degrees of impact from the anticipated downturn. The Applied Water (AW) segment is expected to see a modest impact, while the Water Infrastructure (WI) and Water Services and Solutions (WSS) segments might face a slight impact. The Measurement & Control Solutions (MCS) division is projected to encounter very limited impact.

The analysts believe that the overall effect on Xylem’s earnings per share (EPS) will be minimal, with foreign exchange rates potentially serving as a tailwind. They also suggest that the approximately 15% decline in Xylem’s stock price over the past month presents a buying opportunity for investors.

Xylem’s stock performance and the Stifel analysts’ outlook reflect an assessment of the potential economic challenges ahead, as well as the company’s resilience in the face of such challenges. The maintained Buy rating indicates a continued confidence in the company’s long-term prospects despite the anticipated short-term economic headwinds.

In other recent news, Xylem reported fourth-quarter earnings that exceeded analyst expectations, with an adjusted earnings per share of $1.18, surpassing the consensus estimate of $1.13. The company’s revenue for the quarter rose 7% year-over-year to $2.3 billion, also beating expectations of $2.18 billion. For the full year 2024, Xylem achieved revenue of $8.6 billion, marking a 16% increase on a reported basis and a 6% organic growth from 2023. However, the company issued a conservative revenue forecast for 2025, projecting between $8.6 billion and $8.7 billion, which is below the $8.84 billion analysts anticipated.

Citi analyst Andrew Kaplowitz raised Xylem’s stock price target to $152 from $147, maintaining a Buy rating, driven by confidence in the firm’s growth potential and successful simplification efforts. Stifel analysts also maintain a Buy rating on Xylem, though they adjusted their price target to $140 from $150, reflecting expectations of a modest industrial recession in the U.S. from late 2025 through early 2026. Despite these adjustments, both Citi and Stifel express optimism about Xylem’s resilience and potential for long-term shareholder value creation. Xylem’s leadership has addressed economic concerns, emphasizing their strategy to navigate external challenges without significant disruptions.

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