StockMarketWire.com - UBS sees yesterday’s sell-off of Severn Trent following the release of OFWAT's draft proposals as overdone. 'Based on our analysis, Severn Trent’s debt metrics appear stable enough to maintain its dividend over the next regulatory period.'

Upgrades Severn Trent to buy from neutral, target price rising to 1145p from 1090p.

Also raises United Utilities rating to neutral from sell given recent weakness, with target increased to 500p from 470p. However says United Utilities is least attractive stock in the sector as it appears the most cash-flow constrained and most likely to require capital.

Better value seen in National Grid, which remains a buy, TP 665p. Stays neutral on Pennon, 525p, and Northumbrian Water, 245p.









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