RBC Capital upgrades United Utilities, downgrades Pennon
RBC Capital Markets upgraded its stance on United Utilities on Wednesday, but downgraded Pennon as it took a look at UK water stocks.
Source: Sharecast
The bank lifted United Utilities to ‘outperform’ from ‘sector perform’ and upped the price target to 1,150p from 1,050p. RBC said it was switching to UU as its preferred play in the water space given its view on upside potential into Ofwat’s Final Determinations and a strong balance sheet position.
RBC downgraded Pennon to ‘sector perform’ from ‘outperform’ and cut the price target to 675p from 725p, saying the company’s updated capex guidance means the balance sheet comes under pressure.
Severn Trent was kept at ‘sector perform’, with the price target lifted to 2,600p from 2,500p. RBC said SVT "remains a quality name in the space, in our view, but trades in line with listed network peers, which means we struggle to justify material further upside".
At 1100 BST, UU shares were up 2.4% at 1,030.50p, Severn Trent was up 1.3% at 2,544.60p and Pennon was down 0.4% at 557.00p.
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