Deutsche Bank upgrades National Grid to 'hold'

19th Nov 2014 10:28

National Grid shares were given a small boost on Wednesday after analysts at Deutsche Bank lifted their recommendation for the utility stock from 'sell' to 'hold'.They hiked their target price for the shares from 725p to 880p."Falling bond yields and excellent UK operational performance have convinced us that National Grid shares will continue to trade at a record premium to its regulatory asset base (RAB) for the foreseeable future," the bank said.It pointed out that the stock is trading at a 60% premium to its UK RAB, a level which should be maintained for the next few years.Meanwhile, National Grid's 4.7% dividend yields looks sustainable in real terms until the end of the current UK price review period in 2021, analysts said.However, they said: "For those seeking defensive UK yield, we still prefer United Utilities [rated 'buy'] which offers better value and more sustainable long-term dividends in our view."National Grid was truing 0.7% higher at 962.5p by 10:42, while United Utilities was up 1.3%.