Stifel raises Watts Water stock target to $219, maintains Hold

On Wednesday, Stifel analysts adjusted their outlook on Watts Water Technologies, Inc. (NYSE:WTS), increasing the price target slightly to $219 from the previous $218, while retaining a Hold rating on the company’s shares. Currently trading at $217.54, the company maintains a "GREAT" financial health score according to InvestingPro analysis. The revision follows Watts Water’s fourth-quarter earnings for 2024, which surpassed analysts’ expectations in terms of both revenue and margins, resulting in a 7% earnings per share (EPS) beat in comparison to Stifel’s model.

The company’s financial performance in the last quarter was robust, with reported figures exceeding forecasts and showing impressive revenue growth of 9.53% over the last twelve months. This has been attributed to strong execution despite a challenging market environment. Watts Water’s 2025 guidance, however, indicated that organic revenue growth is expected to be 3% below the consensus and 1% below Stifel’s expectations. The anticipated shortfall in organic revenue is believed to be roughly balanced by the company’s strategic acquisitions and product rationalization efforts.

Despite the anticipated lower organic revenue growth, Watts Water’s projections for margins and the impact of mergers and acquisitions (M&A) activities have led to an EPS forecast that is more optimistic than the consensus. The company’s midpoint EPS estimate stands at approximately $9.02, which is higher than the consensus estimate of $8.91.

Stifel’s maintained Hold rating indicates a neutral stance on Watts Water’s stock, suggesting that the firm sees the company as fairly valued at the current price levels, with the updated price target reflecting a modest adjustment following the latest earnings report. Trading at a P/E ratio of 25.14, the stock’s valuation aligns with InvestingPro’s Fair Value assessment. The new target price of $219 represents a slight increase from the previous target but does not signal a change in the investment firm’s overall assessment of the stock’s potential. For deeper insights, investors can access the comprehensive Pro Research Report, available for Watts Water along with 1,400+ other US equities.

Investors and market watchers may consider the updated price target and Hold rating as an indicator of Watts Water’s steady performance amidst market challenges and the company’s ability to achieve better-than-expected profitability through strategic initiatives and operational efficiency.

In other recent news, Watts Water Technologies Inc . has revealed a restructuring plan involving its facility in Hautvillers-Ouville, France. The restructuring is projected to incur pre-tax charges of approximately $22 million, primarily due to severance payments. This is part of the company’s broader strategy to optimize its manufacturing footprint and improve operational efficiencies. The company expects to fully realize annual pre-tax savings of around $3 million by the end of 2026.

Additionally, Watts Water Technologies has announced a quarterly dividend of $0.43 per share on its Class A Common Stock and Class B Common Stock, scheduled for payment in March 2025. This dividend declaration is a continuation of the company’s commitment to share its success with its stockholders.

On the analyst front, Deutsche Bank (ETR:DBKGn) has maintained a Hold rating on Watts Water Technologies, setting a price target of $240. The firm acknowledged the potential for a construction recovery to be a major factor in revising earnings per share (EPS) forecasts but expressed reservations about predicting a robust recovery in the construction sector by 2025. These are among the recent developments for Watts Water Technologies Inc.

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