Xylem-Evoqua deal timing a surprise, but not tie-up, says Morgan Stanley

After Xylem (XYL) announced that it is acquiring Evoqua Water (AQUA) for $7.5B in stock, Morgan Stanley analyst Connor Lynagh argues that "the timing of the deal comes as more of a surprise than the deal itself." The acquisition is in line with the company’s broader inorganic growth priorities, said the firm, calling the transaction "a logical and frequently discussed combination." The firm, which notes that its estimates are under review given the deal announcement, has an Overweight rating and $115 price target on Xylem shares.