Stifel maintains Buy rating and $34 target on Zurn Water shares

On Wednesday, Stifel analysts maintained their Buy rating and $34.00 price target for Zurn Water Solutions (NYSE:ZWS), a $5.7 billion market cap company, following the company’s financial performance report. According to InvestingPro analysis, the stock is trading slightly above its Fair Value, with analysts setting price targets ranging from $29 to $42. Zurn Water Solutions exceeded revenue expectations with a total of $388.8 million, surpassing both Stifel’s projection of $381.9 million and the Street’s estimate of $383.6 million. The company also reported an adjusted EBITDA of $98.0 million, which was higher than Stifel’s forecast of $94.8 million and the Street’s prediction of $95.1 million.

The company has reaffirmed its outlook for 2025, expecting an EBITDA between $405-$420 million, which aligns closely with Stifel’s estimate of $408.6 million and the Street’s forecast of $409.9 million. InvestingPro data shows the company maintains a strong financial health profile with a "GOOD" overall rating, supported by a current ratio of 2.91 and moderate debt levels. Additionally, Zurn anticipates core sales growth to be similar to that of 2024, around 3% or approximately $1.61 billion, with Stifel’s estimate slightly lower at $1.59 billion, but still in line with the Street’s expectation.

For the second quarter of 2025, Zurn Water Solutions projects core sales growth to increase by low to mid single-digits, estimated at about $424 million, with Stifel’s prediction slightly conservative at $417.9 million, yet close to the Street’s expectation of $422.8 million. The company also forecasts an adjusted EBITDA margin of 25.5%-26.0%, translating to around $109 million, with Stifel’s estimate just under at $108.4 million and the Street’s at $109.4 million.

Stifel’s analysis highlights Zurn’s significant exposure to tariffs, noting that the company has been effectively countering this with pricing strategies. Moreover, Zurn has plans to substantially reduce its tariff exposure by 2026 by relocating operations out of China. Stifel suggests that the current pricing could lead to margin expansion in the future, especially in consolidated markets with rational competitors. InvestingPro reveals several positive indicators, including strong liquidity and profitable operations, with a gross profit margin of 45.13%. Subscribers can access 7 additional ProTips and a comprehensive Pro Research Report, which provides deep-dive analysis of ZWS among 1,400+ top US stocks.

In other recent news, Zurn Water Solutions reported its first-quarter 2025 earnings, exceeding analyst expectations with an earnings per share (EPS) of $0.31, compared to the forecasted $0.29. The company also surpassed revenue projections, posting $389 million against the anticipated $383.88 million. This performance was driven by a 5% core sales growth and an adjusted EBITDA of $98 million, with the EBITDA margin expanding by 110 basis points to 25.2%. Zurn Water Solutions continues to focus on supply chain restructuring and sustainability, with future guidance remaining positive. Analysts from Oppenheimer and Stifel noted the company’s effective management of tariff impacts and supply chain strategies during the earnings call. The firm maintains a positive outlook for the remainder of 2025, projecting core sales growth in the low to mid-single digits for the second quarter. Additionally, Zurn Water Solutions plans to improve its adjusted EBITDA margin, ranging between 25.5% and 26%. The company is committed to reducing its reliance on China for its supply chain, aiming for only 2% to 3% of its cost of goods sold to come from China by the end of 2026.

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