On Thursday, BMO Capital Markets adjusted its price target for Eversource Energy (NYSE:ES), increasing it to $74.00 from the previous target of $70.00. The firm has retained a Market Perform rating on the stock.
The revision follows Eversource Energy's recent announcement that it has completed the sale of the Revolution Wind and South Fork Wind projects to Global Infrastructure Partners (GIP). The final gross proceeds from the sale amounted to approximately $745 million, which is lower than the initially expected $1.12 billion.
The reduction in proceeds is attributed to decreased capital expenditures prior to the sale's completion and a postponement in the Commercial Operation Date (COD) of the Revolution Wind project. Despite this change, Eversource Energy's management has confirmed their plan to issue equity of up to $1.3 billion and maintain their target for funds from operations (FFO) to debt ratio in the range of 14-15%.
The funds received from the transaction are slated for reducing the parent company's debt. This move is in line with Eversource's strategic financial planning and reflects the company's ongoing efforts to manage its capital structure efficiently.
BMO Capital's revised price target is based on a mark-to-market (MTM) and sum-of-the-parts (SOTP) valuation approach. The new target suggests a modest upside from the current trading levels of Eversource Energy's shares on the New York Stock Exchange.
In other recent news, Eversource Energy has seen significant developments in its financial and operational performance. The company has reported matching analysts' earnings per share (EPS) expectations at $0.95 for the second quarter. Eversource has completed the sale of the Sunrise Wind Project and expects to finalize the sale of additional wind projects in the next quarter.
This is part of the company's strategic shift towards regulated utility operations, with significant investments being made into transmission and distribution infrastructure.
Mizuho has increased Eversource's stock price target to $73 from $62, maintaining an Outperform rating, despite the company's anticipated negative cash flow impacts due to the recent sale of South Fork and Revolution Wind projects to Global Infrastructure Partners (GIP). Meanwhile, BMO Capital Markets has adjusted the company's stock price target from $73.00 to $70.00 due to anticipated project delays and financial impairments.
The company's commitment to regulated utility growth is further underscored by the successful sale of wind projects and anticipated regulatory decisions. Despite challenges in the Water Distribution segment and uncertainties in equity needs, Eversource's management remains confident in achieving its EPS growth rate through 2028.
InvestingPro Insights
Eversource Energy's recent strategic moves align with several key financial metrics and insights provided by InvestingPro. The company's market capitalization stands at $23.83 billion, reflecting its significant presence in the utility sector. Despite the reduced proceeds from the wind project sales, Eversource's dividend strategy remains robust. An InvestingPro Tip highlights that the company has raised its dividend for 25 consecutive years, with a current dividend yield of 4.29%. This consistent dividend growth, coupled with a 5.93% dividend increase over the last twelve months, underscores Eversource's commitment to shareholder returns.
The company's financial health shows mixed signals. While Eversource operates with a significant debt burden, as noted by another InvestingPro Tip, its P/E ratio (adjusted) of 17.13 for the last twelve months suggests a reasonable valuation compared to industry peers. Additionally, the stock's strong return of 17.6% over the last three months indicates positive market sentiment, possibly influenced by the company's strategic asset sales and debt reduction plans.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips that could provide deeper insights into Eversource Energy's financial outlook and market position.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.