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Investing.com - Barclays (LON:BARC) upgraded United Utilities Group (LON:UU) (OTC:UUGRY) from Equalweight to Overweight on Wednesday, while raising its price target to GBP15.35 from GBP12.80.
The upgrade reflects Barclays’ view that United Utilities represents "an attractive value proposition" in the utility sector, with the stock currently trading at what the firm considers a "cheap 10.0% premium" to March 2026 Regulatory Asset Base (RAB).
Barclays has extended its discounted cash flow model to include Asset Management Period 9 (AMP9) in its base calculations, pushing the terminal value assessment from 2030 to 2035, which contributes to the higher price target.
The research firm has also incorporated higher medium-term capital expenditure assumptions into its valuation model for the British water utility company.
Barclays projects that if United Utilities maintains its current 10% premium to Regulatory Capital Value (RCV) through 2030, it would deliver approximately 11.5% internal rate of return (IRR) over that period.
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