Xylem ( NYSE: XYL ) rose 4.1% on Tuesday after analysts at Cowen upgraded the water technology company to Outperform from Market Perform. The investment bank said an expansion of municipal budgets at least through next year and Xylem’s backlog of orders for smart infrastructure will boost margins.
The company’s revenue has declined 5/5% this year because of supply-chain restraints, but orders have risen by about 7% and the backlog is up 60%. The company’s customer base of utility companies and federal infrastructure spending should help Xylem weather any economic slowdown, according to Cowen.
“As risks of recession in key regions like the U.S., Western Europe and China increase, the stability of 50% exposure to municipal markets should benefit the company,” Joseph Giordano, analyst at Cowen, said in the Oct. 18 report.
The bank raised its price target for Xylem to $105 a share from $85.
Xylem's stock has fallen 19% this year, compared with a 22% decline for the S&p 500 Stock Index ( SP500 ).
Seeking Alpha columnist Stephen Simpson rates Xylem ( XYL ) as a Buy on the company's possible revenue gains from municipal infrastructure development .
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Xylem rises 4% after Cowen upgrades water-tech company to Outperform