On Wednesday, analysts at Ladenburg Thalmann upgraded Northwestern Corp. (NASDAQ:NWE) stock from Neutral to Buy, setting a price target of $57.50. With a current market capitalization of $3.2 billion and P/E ratio of 14.1, the company trades at attractive multiples relative to its growth potential. The upgrade is attributed to the company's valuation after recent announcements of two data centers that are scheduled to commence operations in its service territory in 2026 and 2027.
The optimism from Ladenburg Thalmann stems from Northwestern's December 19 announcement that it would provide electric supply service to Atlas (NYSE:ATCO) Power Group's data center in Butte, Montana.
The initial energy load is projected to be 75 megawatts (MW) starting in 2026, with the potential to grow by an additional 75 MW in the following three to five years. According to InvestingPro, Northwestern has maintained and raised its dividend for 20 consecutive years, demonstrating consistent financial stability.
Moreover, Northwestern Corp. signed a letter of intent (LOI) on December 18 to supply 50 MW of power in 2027 to an unnamed data center developer, with expectations to expand the supply to 250 MW or more by 2029. These developments indicate a significant increase in demand for Northwestern's services, which has positively influenced the company's stock outlook.
The two data center agreements represent a substantial growth opportunity for Northwestern, as they will introduce new and significant energy loads to the company's portfolio over the next several years. The first data center, serviced by Atlas Power Group, will bring an immediate and sizeable energy demand, while the second, undisclosed developer's data center, promises a larger expansion of energy supply in the longer term.
Ladenburg Thalmann's price target of $57.50 for Northwestern Corp. reflects confidence in the company's future revenue and growth potential, as it prepares to serve the increasing energy needs of the data center industry in its territory.
Based on InvestingPro analysis, analyst targets range from $51 to $68, with the stock currently appearing undervalued. The firm's analysts have recognized the value these contracts could add to Northwestern's business and have adjusted their stock rating accordingly. Discover more insights about Northwestern and 1,400+ other stocks with InvestingPro's comprehensive research reports.
In other recent news, NorthWestern Energy Group has announced significant developments. The company has unveiled its 2025 Annual Incentive Plan, approved by the Board of Directors, aimed at providing incentive compensation for the fiscal year 2025. The plan's targets are set as a percentage of the base salary, with performance metrics including financial performance, safety, reliability, and customer satisfaction.
In addition, Barclays (LON:BARC) has upgraded NorthWestern Corp (NASDAQ:NWE).'s stock from Underweight to Overweight, with a reduced price target of $56.00. This upgrade follows the company's announcement of securing a 50MW data-center customer, a significant development for NorthWestern's operations in Montana.
Furthermore, NorthWestern Corp. reported its Q3 2024 financial results, revealing a GAAP diluted EPS of $0.76 and a non-GAAP diluted EPS of $0.65. The company also revised its 2024 non-GAAP EPS guidance to $3.32 to $3.47 due to delays in interim rates in Montana, and announced a dividend of $0.65 per share.
The company has also started operations at the Yellowstone County Generating Station, and allocated $21 million for Colstrip transmission upgrades from a Department of Energy grant. Despite regulatory challenges, NorthWestern Corp. expects interim rate relief in Montana by the end of 2024. Lastly, NorthWestern Energy executives are planning to update their Integrated Resource Plan by 2026, remaining optimistic about future opportunities in generation and transmission.
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