American Water Works: Investor Focus Shifts to Pivotal Acquisition Vote

Shares of U.S. water utility American Water Works have stabilized following a recent analyst upgrade, with the market's attention now firmly fixed on a critical shareholder meeting scheduled for February 2026. The central question for investors is whether the company can successfully execute its growth strategy.

A shift in perspective came from Bank of America, which revised its rating on the stock from "Underperform" to "Neutral" last Monday. The firm set a price target of $139, suggesting a moderate upside potential of approximately 8.6% from the price at that time. The broader analyst consensus, however, remains measured. The average price target among market experts stands at $141.20, with a majority—10 out of 12—maintaining a "Hold" recommendation on the equity.

A Defining Moment in 2026

The upcoming event commanding investor focus is the planned acquisition of Essential Utilities. An extraordinary general meeting of shareholders is set for February 10, 2026, to vote on the proposed merger. The key terms of the transaction are established:
* Essential Utilities shareholders will receive 0.305 shares of American Water Works for each share they hold.
* The agreement includes a termination fee of $835 million should the deal fail to close.

Market participants view the successful integration of this acquisition as a crucial test for the company's future expansion plans.

Should investors sell immediately? Or is it worth buying American Water Works?

Underlying Financial Performance Remains Robust

Separate from the pending deal, American Water Works has reaffirmed its standalone financial targets. For the 2026 fiscal year, management forecasts earnings per share (EPS) in the range of $6.02 to $6.12. This would represent growth of roughly 8% over the projected 2025 results. The company's third-quarter 2025 report supports this trajectory, showing a revenue increase of 9.7% to $1.45 billion, while quarterly EPS of $1.94 surpassed market expectations.

Furthermore, management recently demonstrated confidence by completing a share repurchase program valued at $292.99 million. The buyback involved approximately 4.86 million shares, reducing the float by about 2.7% and providing support for per-share earnings.

Current Trading and Outlook

The stock is currently trading at $131.80, positioning it near the midpoint of its 52-week range, which spans from $118.74 to $155.50. The next significant price movement for the shares is likely to be driven by the outcome of the shareholder vote on February 10. Until then, the market appears to be in a holding pattern, assessing the company's operational strength against the execution risk of its major strategic initiative.