On Monday, Jefferies initiated coverage on NiSource Inc. (NYSE:NI) shares with a Buy rating, setting a price target of $39.00. The investment firm's outlook is based on several factors that could potentially drive the stock's total shareholder return up by 15.3%. These include over $10 billion of capital expenditure opportunities linked to data centers and renewable energy projects, which are expected to boost the company's electric generation and gas infrastructure in Indiana.
NiSource is also seen to benefit from favorable regulatory environments in its key operational states. The analyst highlighted the company's disciplined approach to cost management and the issuance of Joseph S. Nye (JSN) securities as additional positive influences on its financial health.
Looking forward, Jefferies identifies an extra $4.0 billion in incremental capital expenditures through 2028. This investment is anticipated to support an 8.5% compound annual growth rate (CAGR) in earnings per share (EPS) from 2024 to 2028. This projection surpasses NiSource's own top-end guidance and the consensus estimate of 7.7% by approximately 80 basis points.
The firm's analysis suggests that NiSource is well-positioned for growth, backed by strategic investments and a strong regulatory framework. The company's commitment to maintaining strict cost controls and its robust financial issuance strategy are also expected to contribute to its positive performance in the coming years.
In other recent news, NiSource Inc. has been making significant strides with a series of recent developments. The company reported Q2 2024 earnings that exceeded expectations and completed approximately $500 million of its 2024 equity issuance plan. It projects a 6% to 8% adjusted EPS growth and 8% to 10% rate base growth from 2023 to 2028.
NiSource also successfully closed a $500 million debt offering in the form of Fixed-to-Fixed Reset Rate Junior Subordinated Notes. The proceeds from this issuance are expected to finance general corporate purposes, including capital expenditures and debt repayment.
In terms of corporate governance, NiSource made amendments to its Articles of Incorporation and Bylaws, and eliminated certain preferred stock classes, effectively streamlining its corporate structure.
Furthermore, the company's subsidiary, Northern Indiana Public Service Company, expanded its solar capacity with the operational Cavalry Solar project.
On the analyst front, Mizuho Securities increased the price target for NiSource to $38, maintaining an Outperform rating. Similarly, Edward Jones reaffirmed its Buy rating, and BMO Capital raised NiSource's shares target to $36, reflecting a favorable settlement agreement related to Columbia Gas of Pennsylvania.
InvestingPro Insights
NiSource Inc.'s financial metrics and market performance align well with Jefferies' bullish outlook. According to InvestingPro data, the company's market capitalization stands at $15.77 billion, reflecting its significant presence in the utility sector. The stock's P/E ratio of 20.63 suggests investors are willing to pay a premium for NiSource's earnings, possibly due to its growth prospects and dividend stability.
Speaking of dividends, NiSource boasts an impressive track record. An InvestingPro Tip reveals that the company has maintained dividend payments for 38 consecutive years, demonstrating a strong commitment to shareholder returns. This aligns with Jefferies' positive view on the company's financial health and disciplined approach to cost management.
The stock's recent performance has been noteworthy, with a 26.89% price total return over the past six months. This upward momentum is further supported by another InvestingPro Tip indicating that NiSource is trading near its 52-week high, which corroborates Jefferies' optimistic price target.
For investors seeking more comprehensive analysis, InvestingPro offers 8 additional tips that could provide deeper insights into NiSource's investment potential.
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