Analysts at Berenberg Bank lowered their price target on Xylem Inc. (NYSE:XYL) to $122 from $125 following the virtual analyst day, where the company emphasized digital strategy, with long-term outlook remaining largely in line with investors’ expectations.

The company adjusted its long-term financial outlook, estimating organic growth to range from 4 to 6% and adjusted EBITDA margin expansion of 50-75bp per year. The analysts view the sales outlook as conservative over the medium term (Street expects approximately 6% growth in 2022 and 2023) given likely infrastructure stimulus, the accelerating adoption of digital solutions, and a greater corporate focus on sustainability.

For 2021, the company said it is experiencing higher-than-expected growth in orders and backlog, however, the supply chain has become increasingly volatile, with escalating electronic component shortages. The company now expects an adverse revenue impact of $100 million in the second half of 2021, which is expected to be pushed to 2022.

Berenberg Bank decreased its 2021 estimates modestly and reduced its 2022 margin assumptions slightly as it assumes supply chain issues linger into next year.