Pentair PLC (PNR) has been rated a "Buy" by Citi, with a revised price target of $118, down slightly from $119, based on a 22.5x P/E multiple applied to the 2026 adjusted EPS estimate of $5.25. The report highlights Pentair's strong Q4 performance, with adjusted EPS of $1.08 surpassing both Citi and Street estimates of $1.02. The company's ongoing transformation initiatives and 80/20 strategy are expected to drive earnings resilience, with a raised 2026 return on sales (ROS) target to approximately 26% from 24%.
Despite challenges in the pool segment due to weak new builds and remodels, Citi sees potential growth driven by aftermarket resilience and improved channel inventory. The residential market remains soft due to high interest rates, but Pentair's transformation efforts are anticipated to expand margins in the Water Solutions segment by 100 basis points in FY25. Citi is optimistic about Pentair's financial health, noting a strong free cash flow conversion of around 102% in FY25 and a net leverage of approximately 1.5x as of Q4 2024, providing flexibility for share repurchases or debt reduction.
Pentair's stock closed at $98.26, down 4.26% on February 4, with a slight after-market increase of 0.76%.