Deutsche Bank upgrades Pennon to 'hold' from 'sell'

(Sharecast News) - Deutsche Bank upgraded Pennon on Friday to 'hold' from 'sell' and lifted the price target to 570p from 490p following the "deeply discounted" rights issue earlier this week. "The amount of £490m was almost exactly in line with the £500m we anticipated," it said. "However, unlike for National Grid last year, the stock has so far traded very well after the announcement.

"It is possible that this changes from Monday when the stock goes ex rights."

However, Deutsche Bank said other elements of the update were better than expected.

"Pennon announced a material per-share dividend cut, although slightly better than we envisaged," it said.

"This should leave the shares yielding circa 6%, above the circa 5.0-5.5% for peers United Utilities and Severn Trent."