American States Water (AWR) is a high-quality water utility that has a strong balance sheet, proven execution record, and a premium valuation compared to peers, but has little room for further multiple expansion, BofA Securities said in a note Wednesday.

The firm noted that over 85% of American States Water's earnings come from its California-regulated utility business, and despite exposure to regulatory volatility the company has consistently outperformed on equity returns.

BofA said it projects the company's EPS to grow from $3.01 in 2024 to $3.85 in 2027, slightly above consensus estimates.

The firm said it used a 5% premium to the water group average 2026 price-to-earnings ratio that reflects the company's strong balance sheet and 10% rate base growth.

BofA initiated coverage of American States Water with a neutral rating and $85 price objective.

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