Barclays has upgraded shares of Entergy Corp (NYSE: ETR), shifting its rating from Equal Weight to Overweight and increasing the price target to $138 from $115.
The adjustment follows a period of positive regulatory developments and the company's demonstration of resilience to storm risks.
Entergy Corp has experienced a series of regulatory advancements this summer, including the E-LA/SERI settlement, which has contributed to the firm's improved outlook.
Barclays highlighted Entergy's long-term earnings per share (EPS) compound annual growth rate (CAGR) of 6-8%, which is considered both substantial and achievable.
This growth projection positions Entergy favorably when compared to its multi-state vertically integrated peers.
The company's stock has been previously impacted by storm-related risks. However, Entergy's management has showcased significant improvements in storm preparedness and response, particularly during Hurricane Francine over the past weekend.
These efforts have demonstrated the effectiveness of the company's recent investments in resilience.
Barclays also noted Entergy's strong EPS growth potential, which is supported by above-average industrial growth. Additionally, the firm's rate risk is mitigated, with four out of six Operating Companies having Formula Rate Plans (FRPs).
The company's financial health is also expected to improve, with a forecasted 15% funds from operations (FFO) to debt ratio.
Currently trading at approximately a 5% discount to its large-cap electric peer group, Entergy is envisioned by Barclays to potentially reach or slightly exceed the industry average valuation into 2025.
Entergy Corporation (NYSE:ETR) witnessed a strong second-quarter earnings report, with operating earnings per share (EPS) of $1.92, surpassing both BMO Capital's estimate and the consensus estimate. BMO Capital, subsequently, raised its price target for the company to $131, maintaining an Outperform rating.
Evercore ISI also increased its price target for Entergy to $120, citing potential growth from data centers and large projects in the Gulf region. The company confirmed a robust net liquidity of $5.9 billion and its adjusted EPS guidance for 2024, indicating a positive financial trajectory.
InvestingPro Insights
Following the upgrade from Barclays, Entergy Corp (NYSE:ETR) shows a mix of promising signs and potential concerns according to InvestingPro. The company operates with a significant debt burden, which is a point of consideration for investors. However, Entergy has raised its dividend for 9 consecutive years, signaling a commitment to returning value to shareholders. This is further supported by the company maintaining dividend payments for 37 consecutive years, showcasing its long-term reliability in rewarding investors.
InvestingPro Data highlights a market capitalization of $27.47 billion and a P/E ratio of 15.37, suggesting a valuation that could attract investors looking for reasonable pricing in relation to earnings. The company's revenue growth for the last quarter was at 3.78%, indicating a positive short-term trend. Additionally, Entergy's dividend yield stands at 3.56%, which is competitive and could be appealing for income-focused portfolios.
For those seeking further insights, there are additional InvestingPro Tips available for Entergy Corp, which can be found at https://www.investing.com/pro/ETR. These tips provide a deeper dive into the company's financial health and market performance, offering a comprehensive analysis for investors.
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