BofA Securities has reinstated coverage on Edison International (NYSE: NYSE:EIX) with a Buy rating and set a price target of $95.00.
The firm highlighted the potential positive impact of Edison International's proposed settlement for approximately 60% of its wildfire liabilities under the pre-AB 1054 framework.
The settlement could favorably influence the company's future recovery of Woolsey fire expenses.
Since July 24, 2024, Edison International's shares have seen a notable performance, outpacing its peers by 4.6%.
BofA Securities suggests that there is potential for further multiple expansion and upside to consensus estimates, contingent on the outcomes of phase 2 of the 2017/2018 cost recovery proceedings.
The firm views Edison International as uniquely positioned as an electric-only utility in California, which could benefit from the state's electrification policies.
BofA Securities forecasts earnings per share (EPS) for Edison International for the years 2024, 2025, and 2026 at $4.97, $5.63, and $6.09, respectively. These projections are slightly above the consensus for the same years, which stand at $4.94, $5.63, and $5.99. The expected total return, including the price upside, is projected to be 16.5%.
The analyst's comments offer insight into the rationale behind the positive rating and price target, citing the unique leverage Edison International has due to California's electrification policy.
In other recent news, Edison International has seen several noteworthy developments. Argus has increased its stock price target for Edison International from $82 to $97, maintaining a Buy rating.
The adjustment reflects the company's strong position in a supportive regulatory environment, a robust balance sheet, and a substantial residential customer base in Southern California. Southern California Edison, a subsidiary of Edison International, is seeking to recover approximately $1.6 billion from $2.7 billion in losses incurred due to wildfires and mudslides in 2017 and 2018. This proposed settlement is pending approval by the California Public Utilities Commission.
Investment firms Mizuho and Evercore ISI have also raised their price targets for Edison International shares, citing improved valuation and a favorable General Rate Case outcome respectively.
Edison International reported a second quarter core EPS of $1.23 for 2024, aligning with expectations and maintaining its 2024 core EPS guidance of $4.75 to $5.05. In other company developments, Edison International is experiencing faster-than-expected load growth within its service area, presenting opportunities for capital reallocation and additional investments.
InvestingPro Insights
Edison International (NYSE:EIX) exhibits a blend of stability and growth potential as evidenced by recent data and analysis. With a market capitalization of $32.53 billion, the company stands as a significant player in the utility sector. Notably, Edison International has demonstrated a commitment to shareholder returns, raising its dividend for 18 consecutive years, and maintaining dividend payments for over two decades, with a current dividend yield of 3.7%. This consistent dividend growth, with a recent increase of 5.76%, underscores the company's financial health and management's confidence in its future performance.
InvestingPro Tips reveal that Edison International operates with a significant debt burden, which is an important consideration for investors assessing the risk profile of the company. However, the stock has been characterized by low price volatility, indicating a level of market stability that conservative investors might find appealing. Moreover, with analysts predicting profitability for the year and a strong return over the last three months, reflected in a 15.78% price total return, the company's stock shows signs of resilience and potential upside.
While Edison International is trading at a high earnings multiple with a P/E ratio of 33.62, the adjusted P/E ratio for the last twelve months as of Q2 2024 stands at a more moderate 15.24, suggesting a more favorable valuation when considering the company's recent earnings. Investors seeking additional insights into Edison International's financials and stock performance can find more InvestingPro Tips at https://www.investing.com/pro/EIX, where over 6 additional tips are available to guide investment decisions.
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