Jefferies Downgrades Essential Utilities, Inc. (WTRG) to Hold

Jefferies analyst Julian Dumoulin-Smith downgraded Essential Utilities, Inc. (NYSE: WTRG) from Buy to Hold with a price target of $41.00 (from $44.00).

The analyst comments "Downgrade to Hold as LT water growth fades: WTRG delivered a solid 3Q, aligned with our expectations from the initiation, including a 5-7% EPS CAGR reinstatement and positive Aqua PA rate case settlement. Yet, there were some unexpected elements as well. The water segment’s downward rate base revision to 6% from 8%, partially due to limited DELCORA visibility, fell slightly below our expectations, likely due to a delayed East Whiteland deal and broader sector challenges, in our view. This slowdown in the water segment (~66% of total rate base) led us to revise the total rate base CAGR through '29 to 7.9% vs. 8.2% (excl. DELCORA) thru’ '28 before, vs. consensus of 7.4%. Our estimated '24-'28 EPS CAGR is now 6.4% vs. 6.8% previously vs. 6.3% consensus. '25-'29 EPS CAGR now at 5.6% vs Street at 5.8%. Equity financing also came in weaker than expected, with new ATM guidance at cumulative $350M b/w ’24-’25. We now expect WTRG to improve to Moody's 12% FFO/Debt downgrade threshold in 2026, one year later than we previously projected but aligning with Mgmt.'s aim to address Moody’s negative outlook in 2026. On balance, the stock has re-rated successfully, and we see less appeal to a non-electric, hybrid gas/water utility."

For an analyst ratings summary and ratings history on Essential Utilities, Inc. click here. For more ratings news on Essential Utilities, Inc. click here.

Shares of Essential Utilities, Inc. closed at $40.35 yesterday.

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