Xylem Climbs as Barclays Says Interim Chief to Cut Costs
Xylem Inc. (XYL), which replaced its chief executive officer earlier this month, rose the most since July after Barclays Plc upgraded the stock, saying successor Steve Loranger will be more aggressive in slashing costs.
The water company, based in White Plains, New York, spun off in 2011 while Loranger was chairman of ITT Corp., gained 2.5 percent to $28.23 at the close in New York the most since July 1. Xylem also said today it won an ozone-treatment system contract in China valued at $1.9 million to improve municipal water supplies in the Jinshan district of Shanghai.
“Steve Loranger has shown a willingness in the past to be creative in shareholder value creation through the prior breakup of ITT,” Scott Davis, a Barclays analyst in New York, said in a note to clients today. “We would assume that he would be willing to entertain further consolidation within the industry and at the very least be more aggressive on cost targets and the balance sheet.”
Loranger took over as interim chief on Sept. 9 after Gretchen McClain stepped down. Davis raised his rating on Xylem, whose pumps helped clear New York tunnels of Hurricane Sandy floodwaters, to overweight or the equivalent of buy from equalweight. Of 15 analysts covering Xylem, four advise buying the stock, eight recommend holding and three say sell.
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