On Friday, Mizuho (NYSE:MFG) Securities demonstrated a bullish stance on Spire Inc. (NYSE:NYSE:SR), upgrading the stock from Neutral to Outperform and raising the price target to $76.00, up from the previous $65.00.
The adjustment reflects an increased forecast for the company's adjusted earnings per share (EPS) for fiscal year 2026, now set at $5.25 per share. This estimate surpasses the current highest projection on the Street by 6%, or $0.29 per share.
The optimism from Mizuho is partly due to an anticipated positive outcome from Spire's 2025 rate case, which is expected to take effect in early fiscal year 2026. The firm's analysis suggests that the market has not fully accounted for the potential impact of this rate case on Spire's financial performance.
According to Mizuho's assessment, Spire Missouri, which accounts for roughly 45% of the company's operating income, has shown an average annual return on equity (ROE) of 6.6% from fiscal years 2022 to 2024. This is a dip compared to the 9.3% average in the three years prior.
"If the subsidiary can earn ~8.1% as our estimates imply, it would rebase Missouri growth to a y/y +30% net income increase into FY26," analysts at Mizuho said.
This projection is considered conservative by the firm's standards. The anticipated growth is expected to solidify Spire's financial standing and potentially close the valuation gap between Spire and its local distribution company (LDC) peers.
The firm also believes that following this growth spurt, Spire could maintain a compound annual growth rate (CAGR) within its target range of 5-7%. This sustained growth rate would further support the company's valuation in comparison to its peers in the industry.
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