UPDATE: Nomura Initiates Coverage on Pentair, Reasons for Optimism

In a report published Monday, Nomura analyst Shannon O'Callaghan initiated coverage on Pentair Ltd. PNR with a Buy rating and $85.00 price target. In the report, Nomura noted, “Over the last 10+ years Pentair has transformed itself from a diversified holding company to a flow-focused operating company, but it has taken time for PIMS (Pentair Integrated Management System) to become implemented and institutionalized in the company culture. Both Pentair Water and Tyco Flow have had a history of underachieving margin potential, in our view, so when these two businesses came together in the new Pentair we were initially skeptical that Pentair was up to the task of finally realizing the upside margin (and growth) potential in these businesses. We see four key reasons to be more positive now. Our $85 price target is based on 17x our 2015 EPS estimate of $5.” Pentair Ltd. closed on Friday at $70.01.