UPDATE: Goldman Sachs Upgrades American Water Works to Buy on Strong Upside Potential

Goldman Sachs raised its rating on American Water Works

from Neutral to Conviction List Buy and increased its price target from $40 to $42. Goldman Sachs commented, "Even after outperformance vs. the S&P500 in the last 3 years, we still believe AWK offers strong upside, especially after its 7% pullback (vs. S&P500 +5%) since its August highs. We expect AWK to benefit from (1) above average rate base growth as the company invests in replacing aged water infrastructure; (2) recently granted rate increases; and (3) improving cash flow, which will mitigate equity needs. We forecast AWK will deliver a 3 year EPS CAGR of 10%, well above peer averages." American Water Works closed at $36.37 on Wednesday.