Evoqua Water Technologies Corp. (AQUA) PT Raised to $32 at Stifel, Light Guidance is Front Loading Costs on High Margin Revenue
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Stifel analyst Nathan Jones raised the price target on Evoqua Water Technologies Corp. (NYSE: AQUA) to $32.00 (from $28.00) after shares shares sold off 8.7% due to soft guidance for F1Q21 and a soft outlook for the full year.
The analyst reiterated a Buy rating for 3 reasons:
1) Evoqua is setting the bar low
2) Outsourced water order strength defers revenue past F2021 but is highly accretive to margins and ROIC
3) There's no improvement from the current COVID-19 situation in the F2021 framework
The analyst stated "Management guided to a very strong year of growth for capital expenditures in F2021 due to very strong outsourced water orders. This defers revenue and reduces FCF BUT is higher margin and high ROI investment. This is good for the long term investor".
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