Badger Meter (BMI) stock selloff despite a Q2 beat reflects elevated short interest amid management concerns around rising electronic component costs becoming a growing headwind, RBC Capital Markets said in a research report emailed Thursday.

The company is ready to offset cost concerns and the tightening availability of electronic components due to AI-driven semiconductor demand through pricing actions, analysts said, while lowering their 2026 EPS estimate by $0.10 to $4.55.

The company also confirmed the H2 ramp in advanced metering infrastructure deployments remains on track, according to the note.

The brokerage said it reiterated its outperform rating on the stock and lowered its price target to $162 per share from $169.

Price: 124.50, Change: -2.17, Percent Change: -1.71