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Investing.com - BofA Securities has lowered its price target on American Water (NYSE:AWK) to $133.00 from $134.00 while maintaining an Underperform rating on the stock. The utility company, currently valued at $27.87 billion, trades at a P/E ratio of 25.97x, supporting BofA’s cautious stance. According to InvestingPro analysis, the stock appears to be trading above its Fair Value.
The firm cited valuation concerns as the primary reason for its cautious stance, noting that American Water now trades at the second highest 2027 estimated price-to-earnings multiple among all water, electric, and gas companies in BofA’s coverage universe.
BofA Securities analyst Ross Fowler expects a "quiet second quarter update" from the water utility company, according to a research note issued Monday.
The investment bank expressed interest in hearing new CEO John Griffith’s perspective on long-term growth prospects for American Water.
BofA anticipates a comprehensive guidance update from the company with its third-quarter 2025 earnings report.
In other recent news, American Water Works Company, Inc. announced its agreement to acquire Nexus Utilities’ assets for approximately $315 million, expanding its operations across eight states and adding nearly 47,000 customer connections. This acquisition aligns with the company’s growth strategy and is subject to regulatory approval, expected to finalize by August 2026. Additionally, Pennsylvania American Water, a subsidiary of American Water, plans to purchase the Indian Creek Valley Water Authority and the Sutersville-Sewickley Municipal Sewage Authority for a combined $36.05 million. These acquisitions will add approximately 2,700 water and 500 wastewater connections, pending approval from the Pennsylvania Public Utility Commission. Furthermore, Pennsylvania American Water agreed to acquire Pittston’s wastewater system for $26.4 million, enhancing its service with planned investments of over $5.1 million. On the governance front, American Water appointed Raffiq Nathoo to its board of directors, bringing extensive financial expertise from his tenure at Blackstone (NYSE:BX). UBS maintains a Neutral rating on American Water stock, citing the company’s growth potential, including its active rate case and acquisition activities.
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