Wells Fargo upgrades California Water Service to Equal Weight, ups target to $57

As previously reported, Wells Fargo upgraded California Water Service to Equal Weight from Underweight with a price target of $57, up from $50. The firm notes shares of California Water Service have trailed larger cap peers and now trade at 5%-10% price to earnings discounts to water peers based on Wells’ 2024-2026 EPS. The firm is hopeful that the resolution of the 2023-2025 Cal Water GRC earlier this year will make it much easier for investors to make sense of California Water Service’s quarterly and annual results and allow management to deliver the consistent EPS growth that is expected of a water utility. With nearer-term regulatory risk diminished and optimism that full decoupling will be restored for CA water utilities, California Water Service’s current discount could prove excessive, especially if management can execute.