Ecolab on a buy zone as Q2 results surpass estimates amid a stock upgrade

Ecolab Inc. (NYSE:ECL) closed down 2.70% on Tuesday after its Q2 financial report. The company posted earnings per share of $1.10, below $1.22 in the prior year. The earnings were still more than estimates of $1.09 per share. The revenue for the quarter was higher at $3.58 billion from $3.16 billion in the prior year. Analysts had projected $3.48 billion in revenue.

Despite the stock closing lower on Tuesday, we believe the earnings were strong enough for a buy call. Ecolab stock has been recovering, with gains of 0.93% in a month. That compares to losses of 31% year-to-date. The low price of the stock had UBS analysts issuing an upgrade.

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UBS Joshua Spector says Ecolab’s earnings revisions have troughed. That gives the company an upside potential to reach consensus projections next year. The analyst also opines that a ramp-up in the company’s pricing helps it neutralize the inflation issue. The analyst raised the stock’s price target from $186 to $205.

Ecolab stock retraces to the $156 support

Technically, Ecolab is retracing after breaking through the $156 support. The MACD indicators remain bullish on the stock.

Following the latest correction, Ecolab opens buy opportunities close to $156 support. The stock is pushing higher from the daily candlestick after the latest retracement. The next targets for the stock are $172 and $184. If the stock overcomes the two resistance levels, it will reclaim the $200 price, in line with UBS projections.

Summary

Buy Ecolab stock as the price remains bullish at the support zone. The stock has a buy rating with a $205 target at UBS. The immediate resistance is at $172.

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