Market Overview

Aqua America Upgraded On M&A Prospects

Share:
Aqua America Upgraded On M&A Prospects

Following its meeting with water utility executives around the 2017 NAWC Water Summit, Wells Fargo Securities upgraded shares of Aqua America Inc (NYSE: WTR). The firm attributed the positivity to the management focus on the "tuck-in" M&A arena and expectations for a constructive outcome in the upcoming PA rate relief case.

As such, the firm upgraded shares of Aqua America from Market Perform to Outperform and raised its price target from $35 to $40.

At the time of writing, shares of Aqua America were up 1.53 percent at $35.84.

Analysts Jonathan Reeder, Neil Kalton and Sarah Akers said they are now increasingly convinced that potentially pursuing growth outside of the regulated water/wastewater space, namely gas LDC purchase or a non-regulated venture, is on the backburner for now.

Instead, the analysts said the company is focused on capitalizing on the budding opportunities in the "tuck-in" M&A arena.The analysts noted that their earnings per forecast incorporate only $50 million of deals annually in 2018 and beyond versus the more than $120 million pending. Therefore, the analysts said there could be upside to their outlook if the accelerated pace continues.

See also: Pour A Glass Of This New Water ETF

Wells Fargo also expects a constructive outcome to be achieved in the upcoming PA rate case. The company indicated it would file infrastructure charge in 2017 and the rate case filing will likely occur in 2018, with resolution expected in 2019.

The firm said it believes the two concerns have weighed on the shares, as a result of which the shares currently trade at a 7-9 percent discounts to water peers. Now that the overhangs are removed, the firm believes a more in line multiple to water utility peers is deserved and should materialize.
_______
Image Credit: By Aqua America, Inc. [Public domain], via Wikimedia Commons

Latest Ratings for WTR

DateFirmActionFromTo
Jan 2020B of A SecuritiesDowngradesBuyNeutral
Aug 2019UBSDowngradesBuyNeutral
Jul 2019Bank of AmericaInitiates Coverage OnBuy

View More Analyst Ratings for WTR
View the Latest Analyst Ratings

 

Related Articles (WTR)

View Comments and Join the Discussion!

Posted-In: Jonathan Reeder Neil Kalton Sarah Akers Wells Fargo SecuritiesAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

Latest Ratings

StockFirmActionPT
DEWilliam BlairUpgrades
SIXGoldman SachsInitiates Coverage On
HPQCFRAMaintains17.0
DLTRCFRAMaintains110.0
DGCFRAMaintains230.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com