Bernstein has named Veolia and Severn Trent as its top water‑sector picks, assigning each an “outperform” rating. Veolia’s price target is set at €40, while Severn Trent’s target is 3,370 pence. The firm also reiterated an “outperform” rating on United Utilities with a target of 1,420 pence and a “market‑perform” rating on Pennon Group with a target of 600 pence.
The UK water sector is entering a "major capex super‑cycle" under the current Asset Management Period (AMP8) running from April 2025 to March 2030. Total projected expenditure for this period is approximately £104 billion in 2022/23 prices, roughly double the £51 billion spent over 2020‑2025. Of this, about £11 billion is earmarked for storm‑overflow improvements targeting roughly 2,500 overflows in England, and nearly £5 billion will fund upgrades to wastewater‑treatment works. The National Audit Office estimates that at least £290 billion of enhancement investment will be required by 2050. Ofwat data show that around 60 % of water mains in England and Wales were installed before 1981, with about 13 % now over 100 years old.
In France, annual water‑sector investment is projected to rise from roughly €6.7 billion in 2024 to a range of €10 billion‑€13 billion by 2040, according to a June 2026 study by La Banque Postale and the development bank SFIL. Veolia, the leading operator in the French market ahead of unlisted rivals Suez and Saur, reported French water revenues of €3.16 billion in 2025, representing 7.1 % of its total group revenues. In March 2024, Veolia secured a €4.3 billion, 12‑year contract with the Greater Paris Water Authority covering 133 municipalities and 4 million residents. Bernstein notes that budgetary constraints on French local authorities could slow investment pace, but may also push municipalities toward alternative financing and partnership models—areas where Veolia has experience.
Regulatory frameworks differ: the UK operates a privatised, regulator‑set return model, whereas France relies on municipal‑level contracting without a national water regulator. Both countries face similar operational challenges, including ageing networks and tightening pollution standards.