Xylem ( NYSE: XYL ) was upgraded at investment firm Credit Suisse after the water technology company reported second-quarter results that topped estimates, with the firm noting it expects a "beat and raise" in the second half of the year.
Analyst John Walsh moved his rating on Xylem ( XYL ) shares to neutral from underperform and raised his price target to $96 from $77, noting that there is "potential upside" to consensus estimates for 2023 earnings after strong performance.
"Despite improving fundamentals (orders, backlog, price/cost positive on dollar basis), we thought the stock would be held back by lagging performance at MCS owing to chip availability," Walsh wrote in a note to clients. "MCS is important because it is [Xylem's] digital water growth segment."
Xylem ( XYL ) shares were little changed in premarket trading on Wednesday.
Walsh added that water is a "key thematic" and as the global economy continues to remain uncertain, along with increased global infrastructure spending, Credit Suisse expects "water/Xylem to receive a safety bid."
In addition to strong second-quarter results, Xylem ( XYL ) raised its revenue guidance to between 8% and 10%, while also boosting its adjusted earnings per share outlook to a range of $2.50 to $2.70 .
Analysts are very cautious on Xylem ( XYL ). It had an average rating of HOLD from Seeking Alpha authors , while Wall Street analysts rate it a HOLD . Conversely, Seeking Alpha's quant system, which consistently beats the market, rates XYL a HOLD .
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Xylem upgraded at Credit Suisse as firm expects 'beat and raise' in second-half