Bank of America Securities analyst Ross Fowler maintained a Sell rating on American States Water (AWR – Research Report) yesterday and set a price target of $71.00.
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Ross Fowler has given his Sell rating due to a combination of factors, primarily revolving around valuation and market positioning. Despite American States Water (AWR) reporting earnings per share (EPS) for Q4/FY’24 that exceeded expectations, the company still faces challenges in terms of its valuation, which is considered high compared to its peers. AWR’s stock trades at a significant premium to both water utility peers and the broader electric and gas utility group, which raises concerns about its future growth potential.
Furthermore, while AWR has benefited from rate cases that allow capital investment and set new rates, these have also resulted in increased costs, such as higher supply and operating expenses, which partially offset revenue gains. Additionally, the issuance of equity through AWR’s ATM offering program has negatively impacted earnings per share. These elements combined contribute to the underperform rating, as the valuation is deemed full, and there is apprehension about compressed EPS growth rates relative to the premium at which the stock trades.
According to TipRanks, Fowler is a 3-star analyst with an average return of 3.5% and a 57.46% success rate. Fowler covers the Utilities sector, focusing on stocks such as Constellation Energy Corporation, American States Water, and Edison International.
In another report released yesterday, Wells Fargo also maintained a Sell rating on the stock with a $76.00 price target.