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Investing.com - JPMorgan has upgraded Pennon Group Plc. (LON:PNN) (OTC:PEGRF) from Neutral to Overweight and raised its price target to GBP6.00 from GBP5.00.
The upgrade follows Pennon’s recent rights issue, which JPMorgan notes has addressed the company’s balance sheet concerns that had previously weighed on the stock.
While JPMorgan acknowledges that Pennon trades at a discount to its peers, the firm believes this discount is justified due to expectations of both lower growth and outperformance compared to industry peers.
The current share price, according to JPMorgan, implies no outperformance for Pennon’s water business, which the firm considers conservative given the company’s established track record.
JPMorgan’s new price target of GBP6.00 represents a significant increase from its previous target of GBP5.00, reflecting improved confidence in the water utility company’s financial position following its capital raising efforts.
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