Intel stock extends gains after report of possible U.S. government stake
Investing.com -- United Utilities Group PLC (LON:UU) has been downgraded to Neutral from Buy by UBS, citing limited upside potential unless there’s a fall in real government bond yields or a substantial improvement in allowed returns precedents.
The bank on Tuesday also lowered the price target for United Utilities to 1,150p from 1,195p, reflecting a 20bps higher weighted average cost of capital (WACC) but also a 20bps higher return in future price controls from 2030 onwards.
In the U.K. water sector, UBS’s top pick is Pennon Group (LON:PNN), with a Buy rating and a price target of 605p, based on its lower valuation.
According to UBS, United Utilities is unlikely to see any earnings per share (EPS) growth beyond FY March 2028, despite a projected £420 million revenue boost in FY March 2026.
The firm also notes that the company’s balance sheet has limited remaining flexibility.
United Utilities is expected to reach a net debt to regulated asset base (ND:RAB) ratio of around 64% by the end of the 2025–30 regulatory period.
Its shares currently trade at a roughly 7% premium to FY March 2026 estimated RAB, compared to a 17% premium for Severn Trent (LON:SVT) and a 1% discount for Pennon.
The stock offers a forecast dividend yield of approximately 4.9% for 2026, aligning with the broader utilities sector, and reflects an implied cost of equity of about 8.7%.