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(Sharecast News) - Jefferies upgraded Pennon to 'buy' from 'hold' on Wednesday but cut the price target to 380p from 500p.
It said uncertainty left by the lack of updated return on regulated equity (RoRe) targets after last week's rights issue has seen shares sell off around 20% to a level below book equity RCV/per share. Jefferies said "this provides a margin of safety".
The bank said adequate returns with small improvements should suffice for shares to re-rate towards 1x over time.
"We think management's plan is credible and see scope for outperformance against low expectations," Jefferies added.
At 1128 BST, the shares were up 2.5% at 329.20p.
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