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Down 6,904.38
Change Today:

Pennon rallies on Barclays upgrade

By Michele Maatouk

Date: Monday 01 Mar 2021

LONDON (ShareCast) - (Sharecast News) - Pennon rallied on Monday after Barclays upgraded the stock to 'overweight' from 'equalweight' following a de-rating.
The bank, which kept its price target on the shares at 1,060p, noted that UK regulated utilities have had weak share price performance through a combination of market focus away from defensives into cyclicals and recovery stocks; fears of reflation and rising yields; and tough regulatory reviews.

Barclays said there is "significant value" in UK regulated utilities.

"1) We believe all utilities will appeal Ofgem's RIIO-2 review by 3 March, which could see returns rise. 2) There is limited impact from bond yields, and a positive inflation impact on UK utilities," it said.

It noted that Pennon has been de-rated due to optically high multiples, and its ejection from the FTSE 100.

"It now trades at a 6% premium to regulatory asset base and, if the 570p cash on its balance sheet is removed, it trades at an attractive circa 10x price-to-earnings, 7% dividend yield."

At 1125 GMT, Pennon shares were up 4.3% at 911.40p.

Note 1: Prices and trades are provided by Digital Look Corporate Solutions and are delayed by at least 15 minutes.


Price Data

Price 6,904.38
Change Today -33.86
22-Apr-21 Close 6,938.24

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