Shares in the utility Pennon Group PLC (LSE:PNN, OTC:PEGRY) (LSE:PNN) have been downgraded to “underperform” by the London team of a leading international investment bank, prompting a 3.8% drop in its value.
Credit Suisse (NYSE:CS.) (CS) essentially suggested the stock has been ‘overbought’.
It said it is expensive compared with both the sector and the FTSE 100, pointing out that it trades at a 43% premium to the regulated asset base (RAB), which it said is “at extremes” for the industry.
It also points out the dividend yield of 3% is at “historic lows”.
CS said it prefers National Grid (LSE:NG.) PLC (LSE:NG.) here in the UK, which it rates ‘outperform’ with a price target of 1,075p.
It values Pennon at 1,020p, or 19% lower than the current share price of 1,265p.