On Thursday, Barclays (LON:BARC) analyst revised his view on Edison International (NYSE:NYSE:EIX), upgrading the stock from Equalweight to Overweight, despite lowering the price target to $84.00 from the previous $91.00. The $30.9 billion utility company, which has demonstrated relatively low price volatility according to InvestingPro data, has seen its shares rise nearly 14% over the past year. The assessment points to Edison International's progress in mitigating risks that have concerned the market, specifically citing advancements in handling wildfire-related issues and regulatory proceedings.
The analyst notes that Edison International is making significant strides in addressing the TKM/Woolsey wildfire claims and their recovery, as well as the pending General Rate Case (GRC) and efforts to reduce wildfire risk. He believes these developments position the company for potential outperformance as it moves into 2025 and beyond.
The company's financial stability is evidenced by its 22-year track record of consistent dividend payments, currently yielding 4.15%, as highlighted in InvestingPro's analysis. This optimistic outlook is bolstered by the company's involvement in California's electrification initiatives, which may lead to increased capital expenditures in the future.
The analyst also highlights Edison International's risk reduction strategies, which include investments in covered conductors aimed at minimizing wildfire hazards. Moreover, the potential approval of the Woolsey and TKM applications is seen as an opportunity for Edison International to exceed its 5-7% earnings per share growth outlook for 2027 and beyond. Barclays points out that the California Public Utilities Commission (CPUC) has shown a proactive and constructive stance, with a recommended Proposed Decision (PD) on the TKM settlement already in place.
Currently, Edison International's shares are trading at approximately a 19% discount compared to other large-cap electric utilities based on estimated 2027 earnings per share, with a P/E ratio of 23.16. According to InvestingPro's comprehensive analysis, which includes over 30 financial metrics and Fair Value calculations, Edison International appears to be trading above its Fair Value.
Barclays upgrade to Overweight reflects his anticipation of potential upside for the company's shares, driven by these positive developments and the company's strategic positioning, supported by its GOOD overall Financial Health Score.
In other recent news, Edison International is facing a multitude of developments. The company reported a Q3 2024 core earnings per share (EPS) of $1.51, with a year-to-date EPS of $3.88, and revised its 2024 core EPS guidance to a range of $4.80 to $5.00.
Despite these positive figures, Ladenburg Thalmann downgraded Edison International's stock rating from Neutral to Sell due to concerns over the company's ability to achieve its long-term EPS growth target of 5%-7%.
Meanwhile, Jefferies initiated Edison International with a Buy rating, indicating an 18% total shareholder return. This growth projection includes an estimated 40-60% recovery from legacy wildfire costs, expected to bolster the company's financial outlook. On the other hand, the company is on watch as the Franklin Fire in Malibu has expanded to 3,000 acres, posing a potential threat to residential areas.
These are recent developments for Edison International. The company has also made significant progress in regulatory proceedings and is committed to achieving net zero greenhouse gas emissions by 2045. Moving forward, Edison International is planning for upcoming ERP and AMI filings within the next 6 to 12 months and sees growth in smaller data centers in California, particularly in AI-related applications.
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