Goldman Sachs today reaffirms its neutral investment rating on Pennon Group PLC [LON:PNN] and cut its price target to 1155p (from 1184p).
Pennon posted a rise in full-year pre-tax profit on Friday and hiked its dividend as it sounded a positive note on the outlook for water and waste.
Centrica: Morgan Stanley downgrades to underweight with a target price of 115p.
MPs have launched an inquiry into regulation of the water industry, potentially adding to political pressure on the sector.
Investors sought out the safety of electricity and water utilities amid the ongoing volatility in global capital markets as a result of the ongoing trade tensions.
The chair of a powerful parliamentary committee has asked the water regulator whether it can influence dividends, executive pay and pension scheme funding at UK water companies.
Defensives were clearly in demand at quarter-end, amid a steady drip lower in technology shares on both sides of the Atlantic.
Utility company Pennon said it was on track to meet full year expectations but warned that its energy recovery facility in Glasgow would cost £95m more than the original budget figure of £155m.
Analysts at JP Morgan upgraded their recommendations for Pennon and Severn Trent, arguing that concerns about regulatory risk, rising government bond yields and possible nationalisation by a Labour government had pushed the shares to "unusually low" levels.
Stronger than expected growth numbers have fuelled expectations that another rise in interest rates is on the way, with City traders now seeing a May rise from the Bank of England as an even-money bet. The economy expanded by 0.5% in the final quarter of 2017, according to official figures last week, faster than economists had forecast. - Sunday Times
UK water companies are not in a good place, said Goldman Sachs on Friday, seeing Severn Trent, Pennon and United Utilities as likely to face further pressure on returns from the next regulatory review.
Pennon Group reported a 5.6% uplift in its first-half revenue on Wednesday, to £723.9m, with its board claiming higher water revenues were driven by customer demand.
United Utilities could be forced to slash its dividend from 2020 due to new regulation, warned Investec, leading it to downgrade its rating on the water company, and cut target prices across the sector.
Pennon, the water and waste group, said half year results remained "on track to deliver in line" for both businesses and it felt well placed for the rest of the year.
Pennon's Viridor waste treatment arm and John Laing have agreed the terms by which the Greater Manchester Waste Disposal Authority will cancel its 25-year recycling and waste management private finance initiative contract.
Derwent London: HSBC maintains Hold with a target price of 3053p.
Analysts at Credit Suisse downgraded their view on the UK water sector, telling clients there was a fair chance that OFWAT would be less generous in its next regulatory price review, PR 19.
Broker Numis said Biffa was one of the top stocks picks in the support services sector as it could be a beneficiary of trends mentioned by rival Viridor this week.
Pennon Group posted its full-year results for the 12 months to 31 March on Wednesday, with revenue rising 0.1% to £1.353bn on an underlying basis.
Deutsche Bank downgraded its recommendations on shares of United Utilities and Severn Trent ahead of the 2019 price review.