On Monday, BMO Capital Markets adjusted its price target on shares of Xcel Energy (NASDAQ:XEL), elevating it to $65 from the previous $64, while sustaining a Market Perform rating on the stock.
The adjustment follows Xcel Energy's first-quarter 2024 results, which included a confirmation of its long-term growth projections. The company anticipates growth at or above the higher end of its expected 5-7% range.
The analyst from BMO Capital noted that despite the positive aspects such as the reaffirmed outlook, financing flexibility, and updates on wildfire exposure and mitigation, Xcel Energy's stock slightly underperformed compared to the broader sector. Currently, the stock trades at a 6% discount relative to its peers, which seems to factor in potential wildfire damages that could exceed what insurance receivables cover.
The maintained Market Perform rating reflects BMO Capital's view that Xcel Energy's future stock performance hinges on its regulatory execution and the management of wildfire liabilities. The firm believes that successful navigation in these areas could lead to an expansion of the stock's multiple.
The price target increase to $65 is attributed to marking to market (MTM) the peer group multiples, as per the analyst's statement. This suggests that the new target is based on recent valuations within the sector in which Xcel Energy operates.
Investors and the market at large will likely monitor Xcel Energy's regulatory compliance and wildfire liability management, as these factors are considered pivotal for the company's valuation and stock performance moving forward.
InvestingPro Insights
As Xcel Energy (NASDAQ:XEL) continues to navigate the complexities of regulatory compliance and wildfire liabilities, a look at real-time data and insights from InvestingPro can provide a deeper understanding of the company's financial health and market position. Xcel Energy's market capitalization stands at a robust $30.35 billion, with a solid track record of dividend reliability, having raised its dividend for 20 consecutive years and maintained payments for 53 years. The company's P/E ratio is currently 16.22, which reflects a market sentiment that values its consistent earnings.
InvestingPro Tips highlight that while Xcel Energy operates with a significant debt burden, analysts have a positive outlook with earnings revisions moving upwards for the upcoming period. Additionally, the company is expected to remain profitable this year, as it has been over the last twelve months. These factors, along with a dividend yield of 4.06%, may appeal to investors seeking stable income-generating stocks.
For those looking to delve further into Xcel Energy's financial metrics and strategic position, InvestingPro offers additional insights. There are 5 more InvestingPro Tips available, which could provide valuable guidance for making informed investment decisions. To access these tips and enhance your investment strategy, consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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