BOJ keeps interest rates flat, but flags rate hikes on rising inflation, GDP
On Wednesday, Stifel analysts adjusted their outlook on Xylem shares (NYSE: XYL), reducing the price target to $140 from the previous $150 while still holding to a Buy rating. The revision 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 water technology company, currently valued at $26.49 billion, trades at a P/E of 29.8x, though InvestingPro data shows an attractive PEG ratio of 0.97, suggesting reasonable valuation relative to growth.
Stifel’s analysis suggests that Xylem’s business will likely face varying degrees of impact across its segments due to the projected economic downturn. The Applied Water (AW) segment is expected to experience a modest impact, whereas the Water Infrastructure (WI) and Water Services & Solutions (WSS) segments might see a slight impact. The Measurement & Control Solutions (MCS) segment is forecasted to have a very limited impact.
Despite the anticipated industrial recession, the analysts believe that the effects on Xylem’s earnings per share (EPS) will be limited. They point to foreign exchange (FX) as a potential tailwind for the company. Stifel views the recent approximate 15% decline in Xylem’s stock price over the past month as an opportunity for investors to buy the shares at a lower price point. According to InvestingPro, the company has demonstrated strong fundamentals with 14 consecutive years of dividend raises and robust revenue growth of 16.27% in the last twelve months.
The analysts’ stance remains optimistic about Xylem’s stock, as they maintain their Buy rating even with the adjusted price target. They have factored in the potential economic challenges while assessing the company’s resilience and the potential support from favorable FX movements. For deeper insights into Xylem’s valuation and growth prospects, investors can access comprehensive analysis and additional ProTips through InvestingPro’s detailed research reports.
In other recent news, Xylem Inc (NYSE:XYL). reported fourth-quarter earnings that exceeded analyst expectations, with adjusted earnings per share reaching $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, topping expectations of $2.18 billion. Despite these strong results, Xylem issued a cautious revenue forecast for 2025, projecting between $8.6 billion and $8.7 billion, which is below the $8.84 billion analysts were anticipating. Additionally, the company projects an adjusted EBITDA margin of 21.3% to 21.8% for 2025, reflecting an increase of 70 to 120 basis points from 2024.
Analyst firms have shown confidence in Xylem’s potential, with Stifel maintaining a Buy rating and a $150 price target, and Citi raising the price target to $152 while also maintaining a Buy rating. Stifel analysts expressed continued confidence after meeting with Xylem’s CEO and CFO, highlighting the company’s strategic focus on productivity and profitability. Meanwhile, Citi’s positive outlook is based on Xylem’s anticipated EBITDA margin expansion and operational efficiency efforts. These developments suggest that analysts believe in Xylem’s long-term growth prospects despite some short-term revenue concerns.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.