Citi upgrades Pennon, sees scope for mean reversion trade

(Sharecast News) - Analysts at Citi upgraded shares of Pennon, telling clients that markets had become unduly pessimistic. In their judgement, the shares had been left discounting an operational underperformance of more than £500m or a quarter of its market value.

The resulting valuation gap meant that the risk/reward profile on offer was skewed to the upside, leaving scope for a mean reversion trade.

"With the company balance sheet now fixed post right issue, we upgrade to Buy and open a 30-day positive catalyst watch ahead of the upcoming CMD on 13th March."