Pennon Group plc (PNN – Research Report), the Utilities sector company, was revisited by a Wall Street analyst today. Analyst Ajay Patel from Goldman Sachs maintained a Hold rating on the stock and has a p682.00 price target.
Ajay Patel has given his Hold rating due to a combination of factors influencing Pennon Group plc’s financial outlook. The recent trading statement revealed a persistence of reduced customer demand which, despite tariff increases and a growth in new customer numbers, has led to a tempered revenue expectation. Additionally, the company has experienced significant non-underlying costs, particularly related to a water quality incident and measures to recognise cost savings, which have affected the bottom line. These elements contribute to a cautious stance on the stock’s immediate growth potential.
Furthermore, Patel’s analysis took into account the higher capital expenditures that have increased the company’s net debt and consequently, its interest costs, despite a lower effective interest rate compared to the previous year. These financial pressures have necessitated a downward revision of earnings forecasts for the forthcoming years and a reduction in the 12-month price target for Pennon Group plc’s stock. Patel’s Hold rating, therefore, reflects these updated estimates and the resulting tempered expectation for stock performance in the near term.
According to TipRanks, Patel is ranked #1929 out of 9079 analysts.
In another report released on September 28, Morgan Stanley also maintained a Hold rating on the stock with a £7.40 price target.
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Pennon Group plc (PNN) Company Description:
Pennon Group PLC is a British water and environmental utility infrastructure company that operates primarily in the United Kingdom. It has smaller operations in the European Union, China, and other countries. The company operates through Water, Non-household retail and other segments. The water business comprises the regulated water and wastewater services undertaken by South West Water. The non-household retail business comprises the services provided by Pennon Water Services in the non-household water and wastewater retail market. Majority of revenue is derived from the water division.
