American Waterworks ( AWK ) which provides water and wastewater services to a broad range of customers in North America and posted strong Q2 performance in August was upgraded at Goldman Sachs ( GS ) from Neutral to the Conviction Buy List.
Goldman noted in it's commentary, "We expect AWK to benefit from (1) above average rate base growth as the company invests in replacing aged water infrastructure; (2) recently granted rate increases; and (3) improving cash flow, which will mitigate equity needs. We forecast AWK will deliver a 3 year EPS CAGR of 10%, well above peer averages."
The upgrade was accompanied by a price target increase from $40 to $42 by the investment banking powerhouse, suggesting 15.5% share price upside.
The Bottom Line
Shares of American Water Works ( AWK ) have a 2.75% dividend yield, based on last night's closing stock price of $36.37. The stock has technical support in the $33-$34 price area. If the stock can firm up, we see overhead resistance around the all-time high levels of $38-$39 a share.
American Water Works ( AWK ) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.4 out of 5 stars.
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