02:58 PM EDT, 09/19/2024 (MT Newswires) -- American Water Works ( AWK ) remains focused on maintaining a constructive relationship with the Pennsylvania Public Utility Commission despite a lackluster outcome on the general rate case, RBC Capital Markets said in a note on Thursday.

The company views the framework for acquisitions via fair market value as essential to achieving 7% to 9% earnings compound annual growth rate. Portfolio diversification and capital reallocation across its utilities remain key drivers for future performance, according to the note.

American Water's mergers and acquisitions outlook is driven by factors like per- and polyfluoroalkyl substances (PFAS) regulations and aging infrastructure, the firm said.

RBC said the company still has several significant rate cases pending in Illinois, Missouri and California, totaling around $300 million, and smaller cases in Virginia, Iowa, Tennessee and Hawaii.

The company plans to raise $1 billion in equity from 2024 to 2028 and plans to manage the loss of earnings from the housing obligations securities note roll-off at the end of 2026 through timely rate case filings and capital deployment in areas like PFAS compliance, the firm added.

RBC reiterated American Water's stock as outperform with a price target of $164.

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