Xylem upgraded to Outperform from Perform at Oppenheimer

Oppenheimer upgraded Xylem to Outperform from Perform with a $118 price target. The upgrade reflects confidence in new Xylem’s “structurally improved” portfolio, the company’s continued beat and raise prospects, “compelling” medium-term growth upside, and an “increasingly supportive valuation” following the stock’s 18% decline year-to-date, the analyst tells investors in a research note. While near-term dilution appears inevitable and deal execution is an understandable concern given the scale of Xylem’s “richly-valued” Evoqua acquisition, other trading headwinds are largely transitory and the combined Xylem-Evoqua operations are positioned for “transformational and increasingly profitable growth over the coming years,” says the firm.