Xylem Inc. (NYSE:XYL) Just Reported Third-Quarter Earnings: Have Analysts Changed Their Mind On The Stock?

Last week, you might have seen that Xylem Inc. (NYSE:XYL) released its quarterly result to the market. The early response was not positive, with shares down 8.4% to US$119 in the past week. Results look mixed - while revenue fell marginally short of analyst estimates at US$2.1b, statutory earnings were in line with expectations, at US$0.89 per share. Following the result, the analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.

See our latest analysis for Xylem

Following the latest results, Xylem's 20 analysts are now forecasting revenues of US$8.95b in 2025. This would be a reasonable 6.3% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to expand 16% to US$3.97. In the lead-up to this report, the analysts had been modelling revenues of US$9.04b and earnings per share (EPS) of US$4.02 in 2025. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.

The analysts reconfirmed their price target of US$149, showing that the business is executing well and in line with expectations. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Xylem, with the most bullish analyst valuing it at US$172 and the most bearish at US$113 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's pretty clear that there is an expectation that Xylem's revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 5.0% growth on an annualised basis. This is compared to a historical growth rate of 11% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 3.0% annually. Even after the forecast slowdown in growth, it seems obvious that Xylem is also expected to grow faster than the wider industry.

The Bottom Line

The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. Happily, there were no major changes to revenue forecasts, with the business still expected to grow faster than the wider industry. The consensus price target held steady at US$149, with the latest estimates not enough to have an impact on their price targets.

With that in mind, we wouldn't be too quick to come to a conclusion on Xylem. Long-term earnings power is much more important than next year's profits. We have forecasts for Xylem going out to 2026, and you can see them free on our platform here.

You can also view our analysis of Xylem's balance sheet, and whether we think Xylem is carrying too much debt, for free on our platform here.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.