LONDON (ShareCast) - (Sharecast News) - Analysts at Citi downgraded United Utilities to 'neutral' on Tuesday after the water group reached the bank's target price.
As far as Citi was concerned, with United's shares now trading close to its justified regulatory asset value premium, the bank felt the firm was now "fairly valued".

From a regulatory perspective, barring any unexpected movement on United's final allowed weighted average cost of capital and its operational targets, Citi believes it now essentially has regulatory clarity, "to a large part, until 2025".

"For us, United Utilities must now work to deliver what appears to be a set of challenging cost reduction targets, reducing the historic costs by 20% in order to meet its forward looking cost targets," said Citi.

The analysts also noted that while the UK political landscape and public opinion remain "fluid", the recent fall in popularity of the Labour Party in the opinion polls had also highlighted the risk of nationalisation and taken much of those concerns away, "at least for now".

In addition to the downgrade, Citi issued United with a new 12-month target price of 878p.

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