Just a reminder today from Xylem (XYL) of why the company is one of the best investments in trends in the water market.
The shares moved up 8.97% ahead of the release of second quarter earnings on July 30, 2020 to close at $73.38. Today, July 14, I’m raising my target price on these shares to $81 from the prior $74. Xylem has been a member of my Jubak Picks Portfolio since September 9, 2012. The shares are up 186.98% in that period.
Three parts to the announcement from Xylem today.
First, the company announced improved guidance for the quarter that ended on June 30. The company now expects a revenue drop of 14% versus previous guidance for a decline in revenue of 20% to 30%.
Second, the company announced that it had signed a deal for a large-scale irrigation project in the Telangana region of India, worth approximately $115 million. This is the largest deal Xylem has signed in India to date. Projections show India with a massive deficit in water in the coming decades for drinking and agriculture.
Third, Xylem has signed a$90 million deal with Anglian Water in the United Kingdom to deploy smart metering, software and network solutions. Water utilities are increasingly looking for meters and software that will enable them to stretch limited water supplies further.
Given where we are–with coronavirus outbreaks running out of control in both India and the United Kingdom–signing these two deals testifies to the strength of the underlying trends in the water market–and to Xylem’s position in that market.