Investors should buy Xylem after its acquisition of fellow water technology firm Evoqua, Goldman Sachs said. The bank reinitiated its buy rating on Xylem with a price target of $133, which implies a 24.2% upside from where the stock finished Wednesday's session.
The newly expanded company should have a better mix of public and industrials, which are both considered more stable than end markets that are mainly residential focused, he added. Meanwhile, he said valuation is more attractive following the stock's underperformance so far this year. Multiples have compressed around the historical average despite expectations for better growth and earnings upside following the deal. XYL .
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