Xylem (XYL) remains a long-term secular growth winner despite a slower start to the year, Oppenheimer said in a Tuesday research note.

The brokerage said it sees a relatively slow start to the year, influenced by stepped-up 80/20 portfolio rationalization, continued weakness in China's utility market and deferred smart-meter project timing from the fourth quarter into the first half.

Looking at the second half, Xylem is expected to see continued underlying demand across its segments and sequential revenue improvement as project activity in Measurement & Control Solutions accelerates, Oppenheimer said.

The brokerage added that it anticipates data center tailwinds broadening across Xylem's water infrastructure and applied water businesses as water management challenges increase alongside data center construction.

Xylem's valuation appears discounted relative to historical levels despite intact organic growth and margin expansion prospects. Oppenheimer maintained its 2026 and 2027 earnings per share estimates at $5.52 and $6.15, respectively, citing cross-selling opportunities, ongoing initiatives and capital deployment upside.

The firm lowered its price target on Xylem to $160 from $165 and maintained its outperform rating.

Price: 121.99, Change: +2.49, Percent Change: +2.08