On Wednesday, Mizuho (NYSE:MFG) Securities displayed confidence in Ameren Corp . (NYSE:NYSE:AEE) shares by increasing its price target on the company's stock to $95, up from the previous target of $93, while maintaining an Outperform rating.
This target aligns with the broader analyst consensus, as revealed by InvestingPro data showing analyst targets ranging from $79 to $99. Mizuho's optimism is based on the potential for a more favorable regulatory environment in Missouri (MO) due to new legislation that could benefit utilities.
The analyst at Mizuho highlighted the active legislative session in MO, noting several bills that have been introduced which could enhance the regulatory framework for utilities in the state.
The bills include measures to extend and improve the Public Infrastructure Investment Act (PISA), modify the Integrated Resource Planning (IRP) process, introduce Right of First Refusal (ROFR) legislation, and implement forward test years for gas and water utilities. This regulatory stability complements Ameren's strong dividend history, with InvestingPro data showing 27 consecutive years of dividend payments and 11 years of consecutive increases.
Ameren has recently experienced positive developments, such as constructive staff testimony in its MO electric rate case back in December. The company also has a track record of reaching settlements in MO, which further supports the analyst's positive outlook. Moreover, last week, Ameren Illinois filed a gas rate case with the Illinois Commerce Commission (ICC), with a final decision and new rates expected by December 2025.
Mizuho's stance is also influenced by Ameren's current market position, where its shares are trading at approximately an 8% price-to-earnings (P/E) premium compared to its peer group.
According to InvestingPro analysis, the stock currently trades at a P/E ratio of 21.1x, with relatively low price volatility. The firm believes that Ameren's stock has the potential to achieve a low-double-digit premium in the market. The raised price target to $95 reflects these multiples and the firm's confidence in the stock's performance. InvestingPro's Fair Value analysis suggests the stock is currently trading above its Fair Value.
In other recent news, Ameren Corp. has seen noteworthy developments. Analysts at Jefferies recently raised the company's stock price target to $100, maintaining a "Buy" rating. This adjustment came in anticipation of Ameren's strong performance through 2024 and into 2025, with expectations of the earnings per share (EPS) compound annual growth rate (CAGR) trending towards the higher end of the previously estimated 6-8% range.
BMO Capital Markets also adjusted its price target for Ameren, initially downgrading it to $93, then upgrading it to $98, reflecting recent developments in a Missouri rate case and Ameren's quarterly earnings report. Ameren's earnings per share (EPS) for the third quarter of 2024 was reported at $1.87, slightly below the anticipated range of $1.90 to $1.93.
The company has refined its earnings guidance for 2024, projecting a range between $4.55 and $4.69, and provided its 2025 earnings outlook earlier than usual, forecasting a range of $4.85 to $5.05. This guidance suggests a year-over-year growth of 7.1%.
Ameren's 10-year investment pipeline exceeds $55 billion, aimed at bolstering economic growth and job creation. Furthermore, Ameren plans to issue $300 million of common equity in 2024 to support its capital investments. These are the recent developments in Ameren's financial landscape.
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