On Tuesday, Wells Fargo adjusted its stance on Edison International (NYSE:EIX) shares, upgrading the utility company's stock from Equal Weight to Overweight. The firm also increased its price target for the stock to $86.00, marking a significant rise from the previous target of $72.00.
The revision comes in anticipation of favorable outcomes from Edison International's ongoing regulatory proceedings. The analyst at Wells Fargo highlighted the potential impact of the final resolution of the 2025 General Rate Case (GRC) and the Track 4 (TKM) wildfire recovery proceedings, which could propel the company's shares within the next 6 to 12 months.
In the past week, Wells Fargo conducted meetings with Edison International's CFO Maria Rigatti, which led to a reassessment of the company's prospects.
The analyst cited the forthcoming regulatory decisions as a key factor in the upgraded outlook, noting that positive resolutions could result in higher earnings per share (EPS) estimates for Edison International.
Specifically, the analyst pointed to the $2.4 billion TKM Cost Recovery filing and the 2025-2028 GRC as pivotal matters. The updated analysis by Wells Fargo now incorporates a 50% recovery expectation for the California Public Utilities Commission's (CPUC) 2017/2018 wildfire cost recovery requests, an increase from the previously estimated 25%.
The report from Wells Fargo reflects an optimistic view of Edison International's financial future, contingent on the successful navigation of regulatory hurdles and the company's ability to recover a substantial portion of its wildfire-related costs.
InvestingPro Insights
Following Wells Fargo's upgrade of Edison International (NYSE:EIX), the company's financial metrics and market performance provide additional context for investors. According to InvestingPro data, Edison International has a market capitalization of $28.64 billion and is trading at a P/E ratio of 32.67. This valuation indicates a premium compared to the adjusted P/E ratio for the last twelve months as of Q1 2024, which stands at 13.89. The company has also demonstrated a commitment to shareholder returns, having raised its dividend for 18 consecutive years, with a current dividend yield of 4.19%.
InvestingPro Tips highlight that while Edison International operates with a significant debt burden, it has maintained dividend payments for 21 consecutive years. Additionally, the stock has shown strong performance over the last three months with a price total return of 15.79%. Investors should note that two analysts have recently revised their earnings downwards for the upcoming period, which could influence future stock performance. For those looking to delve deeper into Edison International's prospects, InvestingPro offers additional insights, with a total of 11 tips available for the company.
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