** BofA Global Research upgrades rating on American Water Works AWK.N to "neutral" from "underperform"

** Raises price target to $139 from $117; new PT represents a 8.6% premium to stock's last close

** Shares of AWK rise nearly 3% to about $131.6 in morning trading

** BofA says AWK's pending merger with Essential Utilities WTRG.N could help address concerns around water bill affordability and the sustainability of EPS growth guidance

** AWK agreed to buy the water utility peer in October, and intends to close the all-stock deal by the end of Q1 2027

** Brokerage values AWK at a 20% premium over electric peers, citing its 50–100-year infrastructure replacement cycle

** Three of 15 brokerages rate the stock "buy" or higher, 11 "hold" and one "sell"; their median PT is $142, data compiled by LSEG

** As of last close, AWK shares up 4.4% over the past year

(Reporting by Megavarshini G. Somasundaram in Bengaluru)

((Megavarshini.SomasundaramGnanasundari@thomsonreuters.com))