National Grid the pick of utilities sector, reckons Barclays

National Grid looks the most attractive of the utilities stocks listed in London, said Barclays as it initiated coverage on the sector with the view that water companies are "fair value".

National Grid is seen as being attractive for three reasons: that regulator Ofgem will "likely improve from here, which could see returns rising", that the company "is becoming more American but trades at a significant discount to US peers" and that "downside risk limited with material upside potential".

On this last point, Barclays analysts estimate NG is trading at a combined UK and US 14% premium to the regulatory asset base valuation, which implies a UK value at a 14% discount to March 2020 regulatory asset base.

National Grid therefore was given a 950p price target and an 'overweight' rating.

The water companies, Severn Trent, Pennon and United Utilities, were all rated 'equal weight', though Barclays believes the business plans of all three listed water companies may be fast tracked to 31 January.

Thames Water is seen at the bottom, though the analysts said "The best plan may not lead to the highest returns, but we estimate that the three listed water companies are among the best out of the 17 total water companies and will beat regulatory baselines."

Centrica and SSE are not covered by the analysts.