By Alex V 
Investment bank highlights undervalued water company with near-term growth potential as global water demand escalates
JPMorgan has identified a leading pure-play water stock as a top investment pick for 2025, stating the company is currently undervalued and could see its share price jump nearly 20% amid rising global demand for clean water. The bullish call underscores renewed investor interest in the water sector as infrastructure upgrades, climate issues, and population growth drive long-term growth prospects.
JPMorgan’s Bullish Outlook on Water Industry Leader
JPMorgan analysts have spotlighted Essential Utilities Inc. (NYSE: WTRG) as their preferred stock in the water utilities segment, according to a recent client note cited by CNBC. The firm gave the Pennsylvania-based water and wastewater utility an “Overweight” rating and a $46 price target—representing approximately 18% upside from Thursday’s close.
Why JPMorgan Sees Value Now
JPMorgan’s thesis centers on three key factors:
Attractive Valuation: Essential Utilities is trading at a discount relative to historical norms and utility sector peers, despite healthy earnings and dividend growth.
Mission-Critical Infrastructure: As a pure-play utility, WTRG’s revenue is largely insulated from economic cycles and benefits from stable, regulated returns.
Expansion Opportunities: Ongoing acquisitions and a robust project pipeline support future growth as climate change and demographic trends strain existing water systems.
Sector Backdrop: Water Security as a Global Priority
Growing Investment in Water Utilities
Water utility stocks have historically been considered a defensive, low-volatility segment of the market. However, recent trends—including severe droughts, regulatory mandates, and calls for sustainable resource management—have put water security firmly on the global agenda.
According to the World Bank, over $1 trillion in water infrastructure investment is needed globally by 2030, presenting a long runway for industry incumbents.
Industry Insights and Peer Comparison
Other major water stocks such as American Water Works (AWK) and California Water Service (CWT) have also performed well over the past year, but JPMorgan argues that Essential Utilities offers a more compelling combination of yield, growth, and value. As of Thursday, WTRG shares were trading at 18 times forward earnings, compared to 22 times for some larger peers.
Highlights from Company Performance and Strategy
Essential Utilities by the Numbers
Service Reach: Over 5 million people supplied with water and wastewater services, primarily in Pennsylvania, Ohio, North Carolina, Texas, and Illinois
Dividend Yield: ~2.7% (2025 estimate)
Earnings Growth Forecast: 6-8% annual EPS growth through 2027, per company guidance
Strategic Moves
The company has accelerated acquisitions of small, municipally owned water systems and pledged more than $1 billion in annual infrastructure investments.
Investment Risks and Broader Context
What Could Go Wrong?
Despite the bullish view, JPMorgan highlights several risks:
Regulatory delays in acquiring new systems
Rising interest rates pressuring capital-intensive projects
Climate-driven demand shocks or supply disruptions
However, the analysts argue that Essential’s regulated utility structure and recurring revenue make it resilient even in uncertain markets.
Sources
- CNBC: JPMorgan says this pure-play water stock is cheap and can jump nearly 20%
- Essential Utilities, Inc. Investor Relations
- World Bank, Global Water Infrastructure Report (2023)
- American Water Works, annual reports
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