On Tuesday, United Utilities Group PLC (UU:LN) (OTC: OTC:UUGRY) received an upgrade in its stock rating by a Citi analyst from Neutral to Buy. The firm also increased the price target for the utility company to GBP11.37, up from the previous target of GBP9.73.
Citi's positive outlook on United Utilities (LON:UU) is based on the company's potential within the water sector, especially in the lead-up to the regulatory review. The analyst views United Utilities as a prime candidate for investors looking to engage with the water industry.
The analyst cited the company's strong balance sheet as a key factor that should enable United Utilities to support investments for the Asset Management Plan 8 (AMP8) as well as to sustain dividend growth in line with inflation. This financial stability is considered an advantage despite the uncertainties of the political landscape following the Final Determination (FD).
The upgrade reflects confidence in United Utilities' ability to navigate through the forthcoming regulatory period, with an emphasis on the company's readiness to undertake necessary investments. The firm's robust financial position is anticipated to underpin its growth and shareholder returns.
Citi's revised price target suggests a positive outlook for United Utilities' shares in the near term. The new target represents a notable increase from the prior valuation, indicating an expectation of upward movement in the stock's value.
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