BofA upgrades American Water Works to 'neutral'; shares rise

BofA Global Research upgrades rating on American Water Works AWK.N to "neutral" from "underperform"

Raises price target to $139 from $117; new PT represents a 8.6% premium to stock's last close

Shares of AWK rise nearly 3% to about $131.6 in morning trading

BofA says AWK's pending merger with Essential Utilities WTRG.N could help address concerns around water bill affordability and the sustainability of EPS growth guidance

AWK agreed to buy the water utility peer in October, and intends to close the all-stock deal by the end of Q1 2027

Brokerage values AWK at a 20% premium over electric peers, citing its 50–100-year infrastructure replacement cycle

Three of 15 brokerages rate the stock "buy" or higher, 11 "hold" and one "sell"; their median PT is $142, data compiled by LSEG

As of last close, AWK shares up 4.4% over the past year