On Wednesday, Jefferies initiated coverage on shares of MDU Resources Group Inc. (NYSE:MDU), a company operating in the electric and gas utility sector, with a Hold rating. The firm also set a price target of $18.00 for the company's stock.
MDU Resources, which serves the upper-midwest and pacific northwest regions, is focused on maintaining its status as a regulated utility entity, with plans to grow its rate base at a compound annual growth rate (CAGR) of 7-8%.
The analyst at Jefferies outlined a positive outlook for MDU, projecting an 8.3% earnings per share (EPS) CAGR, which sits at the upper end of the company's own 6-8% target range. This growth is supported by MDU's active regulatory strategy and its commitment to regulated growth.
MDU Resources' shares are currently trading at a 10% to 13% premium compared to its electric and gas utility peers. According to Jefferies, this premium reflects the company's diversified utilities, its exposure to data centers, and the outlook for its pipeline operations.
The Hold rating indicates that Jefferies views MDU Resources' stock as fairly valued at its current price, with the $18.00 price target suggesting a stable outlook for the stock's performance. The 3% total shareholder return (TSR) cited by the analyst further underscores the expectation of a modest performance relative to the market.
Investors and market watchers will likely keep a close eye on MDU Resources as it continues to navigate the utility and pipeline markets, leveraging its strategic initiatives to drive regulated growth and meet its financial targets.
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