On Monday, Goldman Sachs updated its stance on Xcel Energy (NASDAQ:XEL), increasing the price target to $73 from $72 while maintaining a Buy rating. The firm's analyst highlighted Xcel Energy's growth guidance, which forecasts a 9% rate base growth, surpassing the average among its covered companies. The analyst noted that Xcel Energy has identified several opportunities that could potentially enhance this already robust growth rate.
The company's earnings growth is projected to reach 8% through 2027, which is higher than the 7% average earnings growth forecasted for the firm's coverage. The analyst pointed out that Xcel Energy is poised to submit significant resource plans in various segments and wildfire mitigation and resiliency plans in certain jurisdictions. Approval of these plans could result in increased capital expenditures and expedited rate base growth.
Xcel Energy currently experiences a 2%-3% load growth in its service territory and anticipates an increase to 4%-5% in the upcoming years. The analyst remains positive about the company's future, attributing the current discounted valuation to concerns over wildfire risks. However, the firm believes that Xcel Energy's outlook is promising and that the current valuation offers an attractive entry point for investors.
The analyst's report concluded with an optimistic view on Xcel Energy's total return potential, which is seen to be approximately 26% to the new price target of $73, up from the previous $72 target.
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