Update shared on 24 Nov 2025
Fair value Increased 1.08%Severn Trent’s analyst price target has been revised upward slightly. The consensus fair value has increased from £28.93 to £29.24 per share, as analysts cite improved profit margin forecasts that offset more modest revenue growth expectations.
Analyst Commentary
Recent updates from street research provide a nuanced perspective on Severn Trent, with opinions divided on the valuation and growth outlook for the company. The following summarizes both optimistic and cautious viewpoints among analysts.
Bullish Takeaways- Bullish analysts have raised their price targets, indicating confidence in Severn Trent's ability to achieve stronger profit margins.
- Improved margin forecasts are seen as supporting a higher valuation, even in the context of softer revenue growth expectations.
- The increase in price targets suggests optimism about Severn Trent’s execution and resilience in a challenging market environment.
- Continued overweight ratings reflect the view that the company has attractive long-term growth potential compared to peers.
- Bearish analysts remain cautious, as shown by reduced price targets, signaling concerns about limited upside from current levels.
- There are reservations about the pace of revenue growth, which some view as insufficient to fully justify a significant re-rating.
- Maintaining neutral ratings indicates ongoing uncertainty about the company's ability to outperform sector expectations in the near term.
What's in the News
- Severn Trent declared an interim ordinary dividend of 50.40 pence per share for the six months ending 30 September 2025. The ex-dividend date is 27 November 2025, and payment will be made on 12 January 2026. The full-year dividend for 2025-2026 is expected to increase to 126.02 pence per share, in line with the company's AMP8 policy of annual growth by CPIH. (Key Developments)
- The company provided earnings guidance for the 2025-2026 fiscal year, projecting turnover around £2.6 billion, including HS2 related income. (Key Developments)
- Liv Garfield will step down as CEO and Executive Director on 31 December 2025. James Jesic will succeed her as CEO from 1 January 2026, following a thorough internal and external process. Garfield will remain with Severn Trent until the end of the financial year to help ensure a smooth transition. (Key Developments)
Valuation Changes
- Consensus Analyst Price Target has risen slightly, increasing from £28.93 to £29.24 per share.
- The discount rate has increased from 6.82% to 7.07%.
- Revenue growth expectations have fallen, moving from 11.39% to 9.57%.
- Net profit margin is forecast to improve, rising from 16.60% to 18.02%.
- The future P/E ratio is expected to decrease, dropping from 19.00x to 17.35x.
Disclaimer
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