Zacks Investment Research downgraded shares of Xylem Inc. (XYL) from OUTPERFORM to NEUTRAL on January 09, 2014, with a target price of $36.00.
We are bullish about Xylem's long-term growth prospects. The company's contract pipeline is strong, which improves the possibility of better revenues in the coming quarters. Also, inorganic growth through acquisitions is anticipated to contribute immensely to revenue growth. Share buybacks and dividend distribution are the added benefits. Anticipating that the impacts from these positives have already been discounted in the company's share price, we have downgraded our recommendation from Outperform to Neutral. Also, increasing use of cash for technological innovations poses threat of losses in the event of research failure. International presence exposes the company to foreign currency translation risks.
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