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Investing.com -- Bank of America downgraded Pentair (NYSE:PNR) to Underperform from Neutral, saying the company’s exposure to softening consumer spending and residential construction could weigh on earnings and investor sentiment through 2025.
The brokerage cut its price target to $100 from $106, citing limited upside and valuation pressure in a weaker demand environment.
While Pentair’s Pool (NASDAQ:POOL) segment, its largest contributor to profit, has outperformed expectations in the first half of the year, BofA said the benefit may not be enough to offset declines in other parts of the business.
The firm expects negative pool volumes in the second half and ongoing pressure on residential water and foodservice-related sales.
Consumer-oriented businesses make up over half of Pentair’s revenue, and BofA said it sees little near-term catalyst for a rebound in discretionary spending or new home activity.
The firm acknowledged that Pentair’s restructuring efforts have improved margins and efficiency, with the company on track to reach its 26% EBITDA margin target by 2026.
However, BofA said those improvements are already reflected in consensus estimates and the stock price.
Pentair shares have held up due to consistent execution and pricing, but BofA said further gains would likely require a recovery in end-market volumes, something it sees limited visibility on in the near term.
The firm values Pentair at 15 times estimated 2026 earnings, in line with peers, but said the company’s reliance on consumer and housing-related markets could constrain both growth and valuation in the year ahead.