United Utilities a New Year.

Morgan Stanley issued an upbeat note on the UK water sector, but said it thought the sector was fairly valued. The broker said that allowed returns for the UK water companies were above the average weighted average cost of capital and the that it now thought returns would stay high for 10 years. The broker said it saw the sector as fairly valued with only shares in AWG looking attractive and the broker raised its target to 1,140p from 950p and maintained its "overweight" stance. The shares rose 8p to 1,048p. Morgan Stanley also upped its rating on Pennon shares to "equal weight" from "underweight" and its target to 1,175p from 945p. The shares fell 6p to 1,152p. Severn Trent's share price target was hiked to 1,070p from 970p, but the broker maintained its "equal weight" rating. The shares fell 37p to 1,038p as they traded without the right to a dividend. The target on Kelda shares was raised to 730p from 620p and United Utilities target was raised to 630p from 615p. Both shares were rated as "underweight and Kelda shares fell 1p to 748.5p and United Utilities stock lost 4p to 671p.


Hard to see how they get from the analysis to the conclusion. And the target prices seem a classic "split the margin between our last wrong guess and the present actual figure.

Prediction: Will open down tomorrow. Probably around 670p!