On Tuesday, Piper Sandler, a financial services firm, adjusted its outlook for Ecolab Inc . (NYSE:NYSE:ECL) by lowering the company's price target from $305.00 to $270.00. Despite this change, the firm maintained its Overweight rating on the company's shares.
The adjustment in price target reflects an anticipation of slower growth for Ecolab in the coming years, attributed to a weaker macroeconomic environment. The analysts at Piper Sandler expect Ecolab's growth to surpass that of the general economy, but they note that the economic growth is forecasted to be lower, which in turn could impact earnings growth for the company.
The analysts also foresee a deceleration in the rate of new customer engagement for Ecolab, particularly in 2025. This expectation is based on the current economic conditions which are likely to affect customer decisions and the pace at which they seek new business partnerships.
The revised valuation of Ecolab is now based on a multiple of 20.1 times the estimated 2026 enterprise value to earnings before interest, taxes, depreciation, and amortization (EV/EBITDA), a reduction from the previous multiple of 24.2 times. This change in valuation multiple is directly linked to the anticipated slower growth trajectory compared to earlier forecasts.
Ecolab Inc., headquartered in Saint Paul, Minnesota, is a global leader in water, hygiene, and infection prevention solutions and services.
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