Benzinga | Dec 1, 2021 08:50AM EST

Wells Fargo Downgrades This Water Utility Company

Wells Fargo analyst Jonathan Reeder downgraded American Water Works Co Inc (NYSE:AWK) to Underweight from Equal Weight and lowered the price target to $170 (an upside of 0.89%) from $171.

* The analyst cites the group's overall valuation and belief that water's relative P/E premium to electrics and gas LDCs is unsustainable longer-term.

* Reeder further says, though American Water's relative P/E multiple has pulled back a bit in recent months, in part due to the near-term slowdown in expected EPS growth as a result of moving to a fully regulated strategy, the stock still trades at 5%-7% premiums to "larger-cap" pure-play peers on his 2022-2024 EPS.

* Recently, American Water's subsidiary West Virginia American Water completed the acquisition of the Page-Kincaid public service district water system.

* Price Action: AWK shares closed lower by 2.74% at $168.57 on Tuesday.