On Friday, Ladenburg Thalmann initiated coverage of Spire Inc. (NYSE:SR) stock with a Neutral rating and a price target of $57.50. The firm's analyst cited the potential for growth in Spire's primary subsidiaries, Spire Alabama and Spire Missouri, as a basis for the rating. The growth is expected to stem from favorable conditions created by commissions and legislation in their operational regions.
The analyst also noted that Spire Missouri has struggled to earn its allowed Return on Equity (ROE) in recent years. However, projections suggest there may be an upside from 2025-2027, with the company potentially achieving a more reasonable earned ROE. This forecast is part of the rationale behind the Neutral rating, as it indicates a balance between the company's current challenges and future opportunities.
Furthermore, the report highlighted Spire's recent strategic move in January 2024, with the acquisition of the MoGas Pipeline system from CorEnergy (OTC:CORRQ) Infrastructure Trust, Inc. (CORL.Q).
The acquisition is expected to enhance Spire's Midstream segment and contribute to an increase in revenues. The analyst believes this development could have a positive impact on the company's financial performance.
The price target of $57.50 set by Ladenburg Thalmann reflects the firm's expectations for Spire's stock value based on the aforementioned factors. The Neutral rating suggests that the firm sees the stock as fairly valued at its current price, considering the potential growth and challenges ahead.
InvestingPro Insights
In light of Ladenburg Thalmann's initiation of coverage on Spire Inc., recent data from InvestingPro provides additional context that may be valuable for investors. Spire's market capitalization stands at $3.56 billion, reflecting the company's size and market value. The P/E ratio, a measure of a company's current share price relative to its per-share earnings, is 16.58, suggesting how much investors are willing to pay for a dollar of earnings. This is a key metric in determining a stock's value and comparing it to others in the industry.
Moreover, Spire's dividend yield is currently at 4.89%, which is notable for income-focused investors. This aligns with one of the InvestingPro Tips that highlights Spire's impressive track record of raising its dividend for 20 consecutive years, underscoring the company's commitment to returning value to shareholders. Additionally, the company has maintained dividend payments for 54 consecutive years, further emphasizing its reliability and financial stability. For investors who prioritize steady income, these aspects of Spire's financial profile could be particularly compelling.
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