Ecolab's (ECL) projected commodity cost increase of high-single-digit percentage in H2 is manageable and expected to be offset by the full implementation of a surcharge on all products and services by the end of Q2, RBC Capital Markets said in a note Tuesday.

The investment firm said Chemical Market Analytics data indicates upward price revisions in Q3 in both ethylene and propylene contracts amid ongoing uncertainties surrounding the Iran conflict. Caustic soda prices, meanwhile, have modestly moderated, the firm said.

Propylene and ethylene prices are now expected to rise by 23.1% and 4.5%, respectively, year over year in Q3, compared with previous estimates of 12% and 2.4% increase, while caustic soda prices are projected to increase 7.3% versus 9% prior estimate, according to the note.

The firm said roughly 20% to 25% of Ecolab's delivered product costs are impacted by fossil fuel-related derivatives.

RBC Capital Markets retained an outperform rating and $337 price target on the stock.

Shares of Ecolab were 1.5% higher in Wednesday trading.

Price: 284.29, Change: +4.29, Percent Change: +1.53