The latest industry conference highlighted the water sector’s unique position, and the premium of this sector over electric and gas peers appears “sustainable into the coming year,” according to BofA Securities.

The American Water Works Analyst: Julien Dumoulin-Smith upgraded American Water Works Company Inc (NYSE:AWK) from Underperform to Neutral and raised the price target from $139 to $155.

The American Water Works Thesis: While renewables have bright long-term prospects, “we perceive few ‘eligible’ carbon free opportunities in US,” and American Water Works remains a “broader beneficiary,” Dumoulin-Smith said in the upgrade note.

“See continued success of ratebase growth as also decisive & consistent vs Utility peers. Municipal budget pressures should become ever more acute in ’21 enabling further opportunities and de-risking high end EPS growth trajectory,” the analyst said. 

“To this point, FMV value legislation has now been passed in 10 of AWK’s 14 state regulated footprint, while the company further enjoys consolidated tariffs in 12 states and water accountability legislation in three.” 

The recent pullback does not “align with continued bid for clean sector,” according to BofA Securities. 

AWK Price Action: Shares of American Water Works were up 1.45% at $150.50 at last check Monday.