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Investing.com - JPMorgan has downgraded Manila Water Co Inc. (PSE:MWC) from Overweight to Neutral, while lowering its price target to PHP35.00 from PHP38.00.
The downgrade follows Manila Water’s significant stock price outperformance, having risen 41% year-to-date compared to the PSEi index’s 3% decline, according to JPMorgan’s analysis.
The investment bank cited concerns that Manila Water could become a potential funding source for the ongoing Maynilad Water IPO, and noted the stock’s valuation has reached 8x 2026E P/E and 9x EV/EBITDA, which is one standard deviation above its long-term mean.
JPMorgan reduced its FY26E net income forecast by 9%, expecting that interest costs from the PHP37.8 billion (US$670 million) Wawa Dam acquisition will offset internal margin savings, despite the deal providing better long-term regulatory leverage through control of the country’s largest private water dam.
The firm maintained a Neutral rather than Underweight rating due to Manila Water’s potential 4.8%/5.0% dividend yield in 2026E/27E, which remains in line with utility peers, though it warned that limited balance sheet room post-acquisition will restrict dividend growth and flexibility for inorganic expansion.
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