CWT - American States Water raised SJW cut as Wells Fargo shuffles water utilities

2023-05-12 12:43:44 ET

American States Water ( NYSE: AWR ) +1.3% in Friday's trading as Wells Fargo upgraded the stock to Equal Weight from Underweight with a $94 price target, raised from $90, swapping places with SJW Group ( NYSE: SJW ), which was cut to Underweight with a $76 PT.

Wells Fargo believes American States Water's ( AWR ) low risk profile, execution track record and strong balance sheet is deserving of the stock's current modest premium.

The utility's constructive rate settlement, which upholds decoupled rates through 2024, is about to be approved, and unlike peers, it has not raised equity since 2009 and is not likely to need more until 2025, the firm said.

SJW Group ( SJW ) remains a bit of a "show me" story with lingering regulatory uncertainties and management that is still trying to earn investor confidence, Wells Fargo said, so the stock offers one of the lowest potential total returns over the next 12-18 months among water utilities.

Also in the water utility sector, Wells Fargo reiterated Essential Utilities ( WTRG ) at Overweight, American Water Works ( AWK ) at Equal Weight, and California Water Service ( CWT ) at Underweight.

More on American States Water:

• Financial and valuation comparisons to sector peers
• Analysis: American States Water: Revitalized Infrastructure Powers Growth
• Stock price return: Down 5% YTD, up 17% in the past 12 months

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