Watts Water Technologies (WTS) may benefit from rapid data-center expansion, improving demand in Europe and stronger margins, though pricing gains are expected to slow, RBC Capital Markets said Thursday in a report.

Data-center sales in Q2 more than tripled from a year earlier and now account for about 8% of year-to-date revenue, with liquid-cooling applications offering particularly strong opportunities as customers use more water and thermal-management equipment, the report said.

Europe also showed a meaningful recovery, with organic sales rising 9% after almost two years of declines, and the improvement appears sustainable into H2, RBC said.

Watts estimates its data-center market opportunity at about $2 billion and expects that segment to grow 15% to 20% annually through 2030, though the timing of large projects may make future sales uneven, RBC said.

RBC lifted its 2026 earnings estimate by $1 a share and expects pricing to decelerate in H2 as earlier tariff-related price increases are compared with higher levels from a year earlier.

RBC raised its price target on Watts stock to $417 from $350 and maintained its sector-perform rating.

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