United Utilities' First-Half Results Bear No Surprises; Shares Rich

We maintain our fair value estimate of GBX 850 per share along with our no-moat rating after United Utilities released fiscal 2023 first-half results largely in line with what it preannounced in its late September trading statement. Interim dividend is set at GBX 15.7, 4.6% higher than last year, in line with the guidance. The final dividend should also grow by 4.6%, implying a total fiscal 2023 dividend of GBX 46 and a 4.4% yield, in line with the sector median. On the other hand, we foresee a 5.1% average annual decline in adjusted EPS through fiscal 2027, well below the 2.3% average annual growth that we project for the sector in the meantime. All in all, we view the shares as significantly overvalued despite an unappealing earnings profile.