Watts Water Technologies' (WTS) code-driven specifications, vertical integration, margin discipline, and growing smart product position it for plumbing tailwinds, RBC Capital Markets said in a Monday research report.
The company's high-quality plumbing portfolio, replacement-driven sales, high-growth potential for data centers, and solid balance sheet boost flexibility and earnings durability, but European challenges from heat pump destocking and residential cyclicality temper upside, analysts wrote.
While connected IoT-enabled valves remain a medium-term margin driver, the brokerage said it sees a balanced near-term risk/reward as shares trade above historical averages.
RBC said it initiated coverage of the stock with a sector perform rating and a price target of $288 per share.
Price: 281.72, Change: +3.14, Percent Change: +1.13
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