Ross Fowler, an analyst from Bank of America Securities, reiterated the Buy rating on H2O America. The associated price target was lowered to $59.00.
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Ross Fowler has given his Buy rating due to a combination of factors surrounding H2O America’s strategic acquisition of Quadvest in Texas. This acquisition provides H2O America with significant exposure to the rapidly expanding Houston metropolitan area, offering up to $500 million in follow-on capital expenditure opportunities. Although the deal is expected to be initially dilutive to earnings per share in 2026, it is anticipated to become significantly accretive by 2028.
Furthermore, the acquisition is expected to enhance H2O America’s growth prospects following the Texas rate case, with new rates anticipated by mid-2027. The company plans to address the initial dilution through a general rate case filing in early 2027, which will incorporate Quadvest and a major water supply project. This strategic move is expected to drive earnings growth, and the anticipated equity issuance could help H2O America recover its valuation discount compared to its peers. Consequently, Ross Fowler maintains a positive outlook on H2O America’s stock, reiterating the Buy rating.