Pennon Group gets Citi and Deutsche Bank 'buy' calls amid dividend cut

What Brokers Say Utilities Written by: Ian Lyall 07:30 Thu 08 Oct 2026 --> Edited by: Jamie Ashcroft Disclaimer No investment advice About this content Editorial Standards & Policies Share article About this content × About Ian Lyall Ian Lyall, a seasoned journalist and editor, brings over three decades of experience to his role as Managing Editor at Proactive. Overseeing Proactive's editorial and broadcast operations across six offices on three continents, Ian is responsible for quality control, editorial policy, and content production. He directs the creation of 50,000 pieces of real-time news, feature articles, and filmed interviews annually. Prior to Proactive, Ian helped lead the business output at the Daily... Read more About the publisher Proactive financial news and online broadcast teams provide fast, accessible, informative and actionable business and finance news content to a global investment audience. All our content is produced independently by our experienced and qualified teams of news journalists. Proactive news team spans the world’s key finance and investing hubs with bureaus and studios in London, New York, Toronto, Vancouver, Sydney and Perth. We are experts in medium and small-cap markets, we also keep our community up to date with blue-chip companies, commodities and broader investment stories. This is content that excites and engages motivated private investors. The team delivers news and unique insights across the market including but not confined to: biotech and pharma, mining and natural resources, battery metals, oil and gas, crypto and emerging digital and EV technologies. Use of technology Proactive has always been a forward looking and enthusiastic technology adopter. Our human content creators are equipped with many decades of valuable expertise and experience. The team also has access to and use technologies to assist and enhance workflows. Proactive will on occasion use automation and software tools, including generative AI. Nevertheless, all content published by Proactive is edited and authored by humans, in line with best practice in regard to content production and search engine optimisation. Pennon Group PLC ( LSE:PNN OTC:PEGRY ) View Price & Profile Pennon Group gets Citi and Deutsche Bank 'buy' calls amid dividend cut Published: 07:30 08 Oct 2026 EDT Pennon Group PLC (LSE:PNN, OTC:PEGRY) £550 million rights issue and dividend cut underpin the water group's strategic overhaul, with Citi and Deutsche Bank both rating the shares 'buy'. The fully underwritten fundraising offers seven new shares for every 15 held at 250 pence each, while the rebased £125 million dividend represents an approximately 30% cut per share. Alongside these measures, Pennon plans £1 billion of additional investment during AMP8, taking the total to £3.6 billion, while targeting gearing no higher than 65% of its regulated asset base. The proposed Pennon Power sale would also support the plan, with Citi indicating approximately £25 million of proceeds would fund behind-the-meter renewables and the remainder would reduce group debt. Pennon says the strategy will restore and enhance operational performance, while Citi notes that most reinvestment is intended to turn the business around. Despite the increased investment, Citi estimates annual regulated asset base growth of about 7% to 8%, below peers' 9% to 10% growth. On valuation, Citi calculates a theoretical ex-rights price of 388 pence, implying a yield close to 5% on the rebased dividend. That compares with approximately 4% for both Severn Trent PLC (LSE:SVT) and United Utilities Group PLC (LSE:UU.) , according to Citi. Citi lists a target of 552 pence, while Deutsche Bank's 550 pence target is accompanied by a last closing price of 361.2p in its note. Deutsche Bank's James Brand stresses that confidence in the recovery will be crucial, as good operational performance is key to medium-term returns and value. Continue reading