Broker snap: United Utilities downgraded to a 'hold'

3rd May 2011 12:04

While RBS has kept its target price for United Utilities at 680p, the broker has downgraded the water supplier to a 'hold', from 'buy', ahead of the group's full year results later this month.The broker expects full-year numbers to be down, reflecting the group's -4.3% K factor in 2010/11, "the first year of the five-year price control," said analyst Iain Turner.The K factor is the annual price change in addition to retail price inflation.This is expected to cut regulated revenues and - with the group having exited all of its unregulated businesses - Turner notes that delivery and outperformance against regulatory targets will now be vital to future growth.---BC