On Friday, RBC Capital Markets adjusted its outlook on Xylem Inc. (NYSE:XYL), a leading global water technology company, by increasing its price target from $157.00 to $162.00. The firm retained its Outperform rating on the stock. This move comes after Xylem reported a robust first-quarter performance, surpassing RBC Capital Markets' operational estimates with a 6.5 cents, or 7%, operating beat.
Xylem's positive quarterly results were attributed to significant growth in its Measurement & Control Solutions (M&CS) and Water Infrastructure Support Services (WSS) segments. The company saw a 22% organic sales increase in M&CS, coupled with a notable 550 basis points expansion in EBITDA margin. Additionally, the quarter was marked by a healthy book-to-bill ratio of over 1.1 times.
The company has also updated its guidance for the year 2024, reflecting the strong quarterly performance and providing a second-quarter forecast that aligns with consensus expectations. A key highlight from the quarter was the announcement of a 20-year build-own-operate outsourcing contract with a hydrogen plant, which indicates long-term business prospects for Xylem.
Looking ahead, there is anticipation for the investor day scheduled for May 30, 2024. The event is expected to further outline the growth and margin opportunities that Xylem's new management team is targeting. This forthcoming investor day could serve as a significant positive catalyst for the company, as stakeholders await detailed presentations on strategic initiatives and financial prospects.
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