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On Friday, UBS revised its price target for United Utilities Group PLC (UU:LN) (OTC: OTC:UUGRY), a UK-based water company, reducing it slightly from GBP12.10 to GBP11.95. Despite the adjustment, the firm has retained its Buy rating on the company's stock. According to InvestingPro data, the company maintains a Fair Financial Health score, with particularly strong price momentum metrics.
UBS's analysis indicates that the revised price control is aligned with United Utilities (LON:UU)' expectations and projects a robust 7% per annum growth in the Regulatory Asset Base (RAB) through at least 2030.
The research firm has increased its total expenditure (Totex) forecast from £11.8 billion to £13.1 billion on a fully diluted (FD) basis. This adjustment is reflected in the raised earnings per share (EPS) estimates for the fiscal years ending in March 2026 and March 2027, which have been increased by 37% and 22%, respectively. The company has demonstrated strong shareholder returns, maintaining dividend payments for 33 consecutive years, with a current dividend yield of 3.05%.
The decrease in the price target to 1,195 pence is attributed to a 25 basis points increase in the real yield, which has been influenced by macroeconomic factors.
However, this impact is partially mitigated by the anticipated higher growth in the company's asset base. UBS's updated valuation reflects these changes, balancing the effects of macroeconomic conditions with the company's internal growth prospects.
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United Utilities Group PLC, which provides water and wastewater services in the North West of England, has been under the scrutiny of regulatory bodies that set price controls to ensure fair pricing and investment in the sector. The company's adherence to these regulations and its growth strategy are critical factors in analyst evaluations and investment ratings.
Investors and stakeholders in United Utilities will be monitoring the company's performance closely, especially in light of the updated financial metrics and the external economic environment that could influence its operations and stock value.
In other recent news, United Utilities Group PLC has been the subject of several analyst modifications.
Jefferies downgraded the company's stock from "Buy" to "Hold," citing a balanced risk-reward profile and potential regulatory outcomes. On the other hand, Citi upgraded United Utilities from Neutral to Buy, highlighting the company's strong balance sheet and potential in the water sector.
Other recent developments include RBC Capital upgrading United Utilities from Sector Perform to Outperform, anticipating benefits from increased total expenditure allowance. The firm also pointed out the company's robust financial position as a key factor supporting substantial investment throughout Asset Management Plan 8 (AMP8).
BofA Securities similarly upgraded the company's stock from Neutral to Buy, expecting about 20% real Regulatory Capital Value (RCV) growth during the upcoming AMP8 regulatory period. However, Barclays (LON:BARC) downgraded United Utilities from 'Equalweight' to 'Underweight', influenced by recent regulatory decisions and market conditions.
These are recent developments, and investors should closely monitor the company's progress and the analysts' assessments from firms like Jefferies, Citi, RBC Capital, BofA Securities, and Barclays.
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