United Utilities up sharply on SocGen upgrade
Shares in United Utilities spiked after Societe Generale upgraded the stock to ‘buy’ from ‘hold’, keeping the target price unchanged at 940p.
FTSE 100
8,172.15
16:59 02/05/24
FTSE 350
4,492.44
16:49 02/05/24
FTSE All-Share
4,446.15
17:04 02/05/24
Gas, Water & Multiutilities
6,010.24
16:49 02/05/24
United Utilities Group
1,049.00p
16:35 02/05/24
The bank said the recent fall in the share price has resulted in a bare 14% premium to march 2015 market value debt versus 16% for Pennon and 29% for Severn Trent, combined with a 4.6% dividend yield and 17% prospective 12-month total shareholder return.
SocGen said that while the shares have outperformed the Eurofirst 300 by 7% through the general selloff over the past month, they have still underperformed the market by 4% and Severn Trent by 6% over the past year
“Given that UU’s enterprise value is only marginally greater than that of Severn Trent (£11.5bn versus £10.2bn), we think the low RCV premium could fuel conjecture of an infrastructure fund bid approach, particularly as UU possesses the strongest balance sheet of the three listed UK water companies,” SocGen said.
At 1054 BST, United Utilities shares were up 3.2% at 879.50p, rallying for the second day in a row, as it benefited from an upgrade by Bernstein on Monday.