Piper Jaffray Downgrades Watts Water Technologies

Piper Jaffray is downgrading shares of Watts Water Technologies, Inc. WTS from Overweight to Neutral to reflect more muted earnings upside prospects in the near term owing largely to material price inflation and a protracted residential market recovery. “We believe these two factors will lead to a more guarded outlook and limit earnings upside in 4Q & 1H11,” Pipe r Jaffray writes. “WTS shares have outperformed the market since mid-June (+20% vs. +8% S&P 500) as investors have adjusted expectations for the earnings power of the company's refined cost structure. We remain comfortable with our FY11/FY12 estimates, but believe the shares are fairly valued and are lowering our price target to $39.” Watts Water Technologies, Inc. closed Friday at $35.17.