American Water Works: UBS Keeps Neutral Rating, Raises PT to $156

American Water Works: UBS Keeps Neutral Rating, Raises PT to $156

American Water Works Company, Inc. (AWK), a major player in the water and wastewater management sector, has seen a notable adjustment in its stock evaluation by UBS. The investment bank has raised its price target for AWK shares to $156, while maintaining a neutral rating. This move comes ahead of AWK's scheduled fiscal Q2 earnings announcement, slated for Wednesday, July 30, after the market closes.

The latest update from UBS follows a series of positive earnings reports from AWK. Analysts project the company to report a profit of $1.48 per share for the current quarter, up 4.2% from the $1.42 per share in the year-ago quarter [1]. This expected increase aligns with AWK's consistent performance in surpassing Wall Street's bottom-line estimates in two out of the last four quarters [1].

For the full year, analysts anticipate AWK to report earnings per share (EPS) of $5.71, a 5.9% increase from $5.39 in fiscal 2024. This trend is expected to continue, with EPS projected to grow by 8.1% year-over-year to $6.17 in fiscal 2026 [1]. AWK's strong capital growth plan and robust regulatory and operational execution have been highlighted as key drivers of this growth [1].

Despite the positive earnings outlook, Wall Street analysts remain cautious about AWK's stock, with a majority indicating a "Hold" rating. Among 15 analysts covering the stock, three recommend a "Strong Buy," nine indicate "Hold," two suggest a "Moderate Sell," and one advises a "Strong Sell" rating [1]. The mean price target for AWK is $143.83, indicating a marginal potential upside from the current levels [1].

The recent grant of $25,000 to the San Marino Fire Department by California American Water, facilitated by the American Water Charitable Foundation, underscores the company's commitment to community safety and emergency preparedness [3]. This initiative, part of the Keep Communities Flowing Grant Program, aims to enhance emergency management capabilities and serves as a model for fleet electrification.

In conclusion, while UBS's price target increase reflects optimism about AWK's financial performance, the neutral rating indicates a cautious stance. Investors should closely monitor the earnings announcement and subsequent market reactions to gauge the stock's potential.

References:
[1] https://www.barchart.com/story/news/33347086/american-water-works-quarterly-earnings-preview-what-you-need-to-know
[2] https://www.marketscreener.com/quote/stock/AMERICAN-WATER-WORKS-COMP-2989352/news/UBS-Raises-Price-Target-on-American-Water-Works-to-156-From-154-Keeps-Neutral-Rating-50491747/
[3] https://www.gurufocus.com/news/2965403/california-american-water-announces-25000-grant-to-support-city-of-san-marino-fire-department-awk-stock-news