Share Prices & Company Research

Market News

01 Mar 2021 | 11:26

Pennon rallies on Barclays upgrade

(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.
Get in touch today
Join Redmayne Bentley
Talk to us now about opening a new account or transferring your account from another provider
0113 243 6941
Get in touch today
Contact your local office
Contact your local office to find out more
The value of your investments and the income from them may go down as well as up, and you could get back less than you invested.
Continuing our Personal Service: View our Latest COVID-19 Update: 30th April 2021
We use cookies on this site to improve your experience and help us provide you with a better website. An explanation of the cookies we use and their purpose can be found within our Cookie Policy. Your continued use of this site means you consent to the use of cookies.