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(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.
14 Jul 2022 16:39
UK dividends calendar - next 7 days
| Friday 15 July | |
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| Scottish Investment Trust PLC | dividend payment date |
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| Monday 18 July | |
| no events scheduled | |
| Tuesday 19 July | |
| Dr Martens PLC | dividend payment date |
| Wednesday 20 July | |
| no events scheduled | |
| Thursday 21 July | |
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| Bellevue Healthcare Trust PLC | ex-dividend payment date |
| BlackRock Income & Growth Investment Trust PLC | ex-dividend payment date |
| Brunner Investment Trust PLC | dividend payment date |
| Castings PLC | ex-dividend payment date |
| Custodian REIT PLC | ex-dividend payment date |
| DCC PLC | dividend payment date |
| Investec PLC | ex-dividend payment date |
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| North American Income Trust PLC | ex-dividend payment date |
| Pennon Group PLC | ex-dividend payment date |
| Porvair PLC | ex-dividend payment date |
| Twentyfour Income Fund Ltd | ex-dividend payment date |
| Vivo Energy PLC | special ex-dividend date |
| Volex PLC | ex-dividend payment date |
| VPC Specialty Lending Investments PLC | dividend payment date |
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