Valued at a market cap of $31.2 billion, Xylem Inc. (XYL) is a global water technology company that specializes in developing innovative solutions for water-related challenges. The Washington, District Of Columbia-based company’s portfolio includes well-known brands like Flygt, Sensus, Goulds Water Technology, and YSI, which serve a wide range of industries including municipal, industrial, agricultural, and residential sectors. 

Shares of this water technology company have lagged behind the broader market over the past 52 weeks. XYL has declined 10.3% over this time frame, while the broader S&P 500 Index ($SPX) has gained 12.5%. However, on a YTD basis, the stock is up 10.4%, outpacing SPX’s 1.3% rise. 

Narrowing the focus, Xylem has also underperformed the Global X Clean Water ETF’s (AQWA) 1.6% return over the past 52 weeks. Nevertheless, it has outperformed the ETF’s 9.7% uptick on a YTD basis. 

On Apr. 29, shares of XYL surged 2.3% after its better-than-expected Q1 earnings release. The company’s revenue improved 1.8% year-over-year to $2.1 billion and topped the consensus estimates by 1.5%. Strong organic growth across all its reportable segments, with a healthy book-to-bill ratio, supported the top line. Moreover, a robust 120 basis points expansion in its adjusted operating margin led to a 14.4% year-over-year rise in its adjusted EPS to $1.03, which also came in 8.4% above Wall Street estimates. The company’s ongoing transformation efforts, including a culture shift, streamlined processes, and segment-focused restructuring, are enhancing its agility and boosting its profitability in a dynamic market environment.

Looking ahead to fiscal 2025, Xylem expects revenue to be between $8.7 billion and $8.8 billion, up approximately 1% to 2% from the year-ago quarter, and projects adjusted EPS in the range of $4.50 to $4.70.

For the current fiscal year, ending in December, analysts expect XYL’s EPS to grow 8.4% year over year to $4.63. The company’s earnings surprise history is promising. It met or topped the consensus estimates in each of the last four quarters. 

Among the 18 analysts covering the stock, the consensus rating is a “Moderate Buy” which is based on 10 “Strong Buy,” one “Moderate Buy,” and seven “Hold” ratings. 

The configuration has remained fairly stable over the past three months. 

On May 16, Mizuho Financial Group, Inc. (MFG) maintained a “Neutral” rating on XYL and raised its price target to $125.

The mean price target of $139.43 represents an 8.9% premium from Xylem’s current price levels, while the Street-high price target of $164 suggests an upside potential of 28.1%.