Severn Trent Shares Upgraded by Jefferies as Pennon Cut to Hold

Severn Trent (LON: SVT) and Pennon Group (LON: PNN) saw diverging analyst calls after Jefferies issued a fresh assessment of the U.K. utilities sector, upgrading one water company while downgrading the other.

The moves come as Severn Trent shares have risen 14.5% over the past 12 months and Pennon has gained 37.3% in the same period.

Jefferies upgraded Severn Trent to buy from hold and lifted its price target to 3,220 pence from 2,610 pence.

The broker told clients in a note that the UK government’s new Water White Paper points to more balanced regulation and more predictable investor returns.

Jefferies added that the sector faces a favourable backdrop heading into 2026, when investment reopeners are expected to create fresh growth opportunities.

In contrast, the bank downgraded Pennon Group to hold from buy, although it raised its price target slightly to 590 pence from 570 pence.

Jefferies said it is rolling its sum-of-the-parts valuation to fiscal 2027 and now assumes a marginally lower level of outperformance in outward direct investment. While the Water White Paper is also viewed as supportive for Pennon, the firm said its updated modelling warranted a more neutral stance.

Overall, data compiled by TradingView shows that 7 analysts covering PNN have a Buy rating, 4 a Hold rating, and 1 a Sell rating. For SVT, 5 have a Buy rating, 7 have a Hold, and 2 have a Sell.