American Water Works Sees Declining Regulatory Risk as Merger Advances, UBS Says
American Water Works (AWK) is entering a period of declining regulatory risk as it advances toward closing its merger with Essential Utilities (WTRG) without a pending water case in the largest Pennsylvania jurisdiction for either company, UBS Securities said in a note Thursday.The investment firm said remaining approval risk is limited, with orders or settlements now pending in six of the eight jurisdictions needed to close the deal. UBS is watching a proposed decision on the merger in Illinois due Friday, though it noted the state's "no harm" standard narrows the range of possible outcomes, and it expects a workable recommendation.UBS said the merger remains on track to close by the end of the first quarter of 2027 and would be 5% accretive to earnings before synergies, while expanding American Water's growth territory and offering optionality through a potential post-closing sale of Peoples Gas.The brokerage is also tracking details of a settlement reached in the Pennsylvania review, expected Sept. 15.UBS reiterated its buy rating on the stock and raised the price target to $162 from $156.Price: $141.21, Change: $+0.88, Percent Change: +0.63%
