On Wednesday, Manila Electric Co (PSE:MER) (OTC:MAEOY) experienced a change in stock rating from a major financial institution. Macquarie has downgraded the company's stock from Outperform to Neutral. Despite the downgrade, the firm has increased the price target for Manila Electric to PHP488.00, up from the previous PHP428.00.
The revision in rating and price target by Macquarie reflects a nuanced view of the company's prospects. The analyst cited that the valuations of Manila Electric have become less attractive, which contributed to the decision to lower the stock's rating. Additionally, there are ongoing regulatory uncertainties that could potentially affect the company's performance.
In the midst of these concerns, there is some progress being reported on Manila Electric's rate-setting process. However, the analyst noted that many aspects of this process are still undecided, which introduces a level of unpredictability into the company's outlook.
Despite the downgrade, Macquarie's outlook on Manila Electric is not entirely negative. The firm maintains a positive stance on the company's expanding power generation business. This aspect of Manila Electric's operations could present opportunities for growth and stability in the future.
Macquarie's base case scenario for Manila Electric includes the assumption of a rate cut in July 2025. This projection is part of the firm's comprehensive analysis and is factored into their revised price target and stock rating.
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