(By Balachander) American States Water Co. (NYSE:AWR) shares were downgraded to "Hold" from "Buy" by Brean Murray, Carret & Co (BMC), citing valuation.
The brokerage is of the view that the shares of American States Water are now fairly priced. The shares have been on a steady rise in the past year, with an accelerated increase in the past few months.
BMC wrote shares are trading just below its target price of $42, and well above the lower end of historical forward and trailing P/E multiples.
The brokerage also noted that the dividend yield of 2.7 percent is toward the bottom of the recent historical range.
BMC wrote that it remains optimistic about American States Water's future prospects, but for now it will await a more favorable valuation for the shares and/or specific catalysts before recommending investors once again purchase shares.
"We suggest investors look toward other water utilities that we consider to have more favorable valuations among our Buy-rated universe," the brokerage said.
San Dimas, California-based American States Water is engaged in the purchase, production, and distribution of water in the United States.
On Thursday, the stock lost 2.12 percent to trade at $40.64. In the 52-week period, shares have been trading between $30.53 and $41.72.