Pennon Group PLC (LSE:PNN, OTC:PEGRY) has received broker support following its half-year trading update, with both Deutsche Bank and RBC reiterating positive ratings despite modest estimate revisions.
Deutsche Bank called the update “mixed” and trimmed its forecasts but kept its 'Buy' recommendation and 540p price target. Analyst James Brand highlighted Pennon’s reiteration of a 7% real return on equity target for 2025/26 and noted improvements in environmental performance, including a halving of pollution and storm overflow incidents.
RBC, meanwhile, made minor adjustments to earnings (EBITDA) forecasts but maintained its 'Outperform' rating and 600p price target.
The broker viewed the 7% return target as a key support for valuation, arguing that the current share price does not reflect potential outperformance in the ongoing AMP8 regulatory period.