On Wednesday, Mizuho Securities initiated coverage on shares NiSource Inc. (NYSE:NI), a leading utility company, with an Outperform rating and a price target of $33.00. The firm highlighted NiSource's potential to achieve slightly above the midpoint of its adjusted earnings per share (EPS) annual growth target, which ranges between 6% and 8% through 2028.
The growth prospects for NiSource are considered attractive when compared to its peers. This outlook is supported by a strong set of capital deployment opportunities, beneficial regulatory environments, and the company's recent financial flexibility following the sale of its stake in Northern Indiana Public Service Company (NIPSCO).
NiSource is also expected to benefit significantly from the growth in data center-related load. The company's Indiana territory, operated by NIPSCO, is deemed particularly well-equipped to meet the demands of the industry, thanks in part to tax advantages implemented by the state government.
While Mizuho's current estimates do not include potential load additions from data centers, the firm anticipates such projects will likely materialize and may even boost NiSource's rate base growth over the medium to long term.
The current valuation of NiSource aligns with its peer group. However, Mizuho believes that the company merits a roughly 1.0x price-to-earnings (P/E) premium, reflecting its robust growth prospects and the strategic advantages outlined in the coverage initiation.
In other recent news, NiSource Inc. has been the focus of significant developments. The company recently reported a 10% increase in adjusted earnings per share (EPS) to $0.85 for the first quarter of 2024, indicating solid growth. Alongside this, NiSource confirmed a $16.4 billion base capital expenditure (CapEx) plan over the next five years, showcasing its commitment to future investments.
Further, NiSource is exploring investments in renewable natural gas, generation, and system modernization, with the final coal retirement for its subsidiary NIPSCO set for 2028. The company's focus on economic development is evident in projects like the Intel (NASDAQ:INTC) initiative in Ohio and Stellantis (NYSE:STLA) in Indiana.
In addition to these developments, BMO Capital Markets has maintained an Outperform rating on NiSource's stock following key meetings with the company's senior management. The firm's positive outlook is based on NiSource's strong balance sheet, potential for earnings growth, and favorable operating environment. These recent developments highlight NiSource's strategic direction and its potential for sustained growth.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.