SPX Technologies' (SPXC) expanding role in data centers is boosting confidence in the outlook for its heating, ventilation and air conditioning business, UBS Securities said in a note Monday.

The company holds a dominant share in water-based cooling systems in data centers, with over 50% market share, and is now positioned to compete in the other half of the market with its newly introduced adiabatic and dry cooling solutions.

UBS also noted potential upside from Ingenia's air handling offerings, which have yet to be deployed in the data center segment due to current capacity constraints.

The brokerage said this could support at least an incremental 1.5% in organic growth for SPX's HVAC segment, rising to about 2.5% if the company replicates its market share in the dry cooling space.

The firm also cited findings from its annual HVAC business survey, which indicated positive channel sentiment and highlighted higher electricity prices as a likely tailwind for commercial original equipment manufacturers.

UBS upgraded its rating on SPX's stock to buy from neutral and raised its price target to $182 from $160.

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