RBC Capital analysts provided their views on Xylem Inc. (NYSE:XYL) following their meeting with the company’s CEO Patrick Decker on Dec 12.

According to the analysts, it sounded to them like Q4/22 is playing out largely as expected, with chip availability improving modestly, and solid price/cost execution. While the 2023 macro remains murky, analysts believe Xylem’s water-related markets remain relatively resilient.

The analysts especially like the company’s leverage to long-term sustainability/secular tailwinds and the margin-accretive mix-shift to 50% digitally-enabled revenues by 2025. Xylem’s backlog today is already reflective of this mix, suggesting recent orders are overweight digital solutions.