Broker snap: HSBC cuts Severn Trent price target after fines
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HSBC has raised its rating on Severn Trent but cut its price target in the wake of the water group's admission that it provided false data to the UK water regulator Ofwat.
The broker lifted its rating on Severn Trent to 'neutral' from 'sell' citing valuation and greater visibility on the fines to be imposed following the confession, but cut its price target to 1,530p from 1,550p.
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HSBC noted that Ofwat had proposed a fine of £35.8m as a result of the guilty plea and for providing poor customer service in recent years.
It anticipates Severn Trent incurring more fines, amounting to £106m.
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