Severn Trent Stock Target Raised as Analyst Predicts Further Upside

Shares in Severn Trent (LON:SVT) are in focus following Morgan Stanley's decision to increase its price target, signaling confidence in the utility firm's future performance. The adjustment comes despite existing concerns.

Morgan Stanley analyst Christopher Laybutt has revised Severn Trent's price target upwards to 3,300p from 3,200p, reiterating an ‘Overweight' rating on the stock.

This positive revision comes alongside a year-to-date increase of 1.6% for the shares, which currently trade at 2,566p after a 0.8% decline so far on Monday. The new target suggests potential for strong gains, despite some headwinds.

The analyst's optimism is supported by Severn Trent's recent financial performance. In May 2025, the company reported record results for fiscal year 2025, showcasing a 41.2% surge in adjusted earnings per share (EPS).

This substantial growth underscores the effectiveness of the company's operational strategies and robust financial health. The strong EPS figure could justify the increased price target, as it signals the company's ability to generate profits and potentially address concerns about dividend sustainability.

However, it's important to note that analyst sentiment has been mixed. As of September 1, 2025, Severn Trent had garnered five ‘buy' ratings, seven ‘hold' ratings, and two ‘sell' ratings, according to data provided by TradingView.

The current analyst consensus price target is 2,902p, suggesting a potential 13% upside from current levels.

However, Severn Trent has faced operational challenges and regulatory scrutiny. In February 2024, Severn Trent Water was fined over £2 million for discharging more than 260 million litres of raw sewage into the River Trent. Although the environmental impact was mitigated by high river flows, the incident raised concerns about the company's environmental compliance and operational practices.

Adding to the challenges, in December 2024, the company faced allegations from the BBC's Panorama of artificially inflating its balance sheet by more than a billion pounds. Severn Trent refuted these claims, asserting that they were “completely inaccurate.” Such allegations, even when denied, can negatively impact investor confidence and market sentiment.