Mizuho Securities has shown optimism for IDACORP, Inc. (NYSE: IDA), increasing its price target to $102 from the previous $99, while maintaining a Neutral rating on the stock.
The adjustment follows what the firm sees as a strong second-quarter performance by the utility company.
IDACORP's recent earnings report surpassed expectations with notable earnings per share (EPS) beat. Additionally, the company has raised the lower end of its guidance.
The firm also highlighted IDACORP's communication regarding possible significant increases to its capital expenditure (capex) and the introduction of incremental financing guidance.
The financial institution noted that despite the positive aspects of IDACORP's performance, the current stock valuation already reflects these benefits. IDACORP's shares are trading at a 7.5% to 8.5% price-to-earnings (P/E) premium, which is considered substantial by the analysts.
The premium comes amidst concerns about the company's balance sheet, as indicated by a negative outlook from Moody's (NYSE:MCO), and the uncertainty regarding the scale of potential future equity issuances, details of which are anticipated to be provided in the third-quarter earnings call.
Idaho-based IDACORP reported a robust financial performance for Q2 2024, with diluted earnings per share rising to $1.71 from $1.35 year-on-year. The company's net income also saw a substantial increase of nearly $21 million compared to Q2 of the previous year, primarily driven by customer growth and higher usage. In light of these positive results, IDACORP raised its full-year earnings guidance to a range of $5.30 to $5.45 per diluted share.
The company is also investing in a 200-megawatt battery storage system and is negotiating for additional resources for 2026. However, it's worth noting that transmission wheeling-related revenues decreased due to changes in settlement terms, and other operating and maintenance expenses, including pension and wildfire mitigation costs, have increased. Despite these challenges, IDACORP is focused on serving the robust pipeline of companies looking to site or expand in Idaho without impacting current customers.
InvestingPro Insights
Following Mizuho Securities' updated assessment of IDACORP, Inc. (NYSE: IDA), a closer look at the company's performance through the lens of InvestingPro data and tips provides additional context for investors. IDACORP has a track record of consistent dividend growth, having raised its dividend for 12 consecutive years and maintained dividend payments for over half a century. This demonstrates a commitment to shareholder returns, a key consideration for income-focused investors. The company's stock is also characterized by low price volatility, suggesting it may appeal to those seeking stability in their investment portfolio.
From a valuation standpoint, IDACORP's market capitalization stands at $5.39 billion, with a P/E ratio of 18.81, reflecting investor sentiment on its earnings capacity. The company's revenue for the last twelve months, as of Q2 2024, was approximately $1.82 billion, with a moderate growth rate of 2.15%. These figures underscore the firm's solid financial foundation and its potential for sustained growth. Moreover, IDACORP's gross profit margin during the same period was a robust 30.57%, highlighting efficient operations and cost management.
For those considering IDACORP as a potential investment, there are additional InvestingPro Tips available at https://www.investing.com/pro/IDA, offering further insights into the company's financial health and market performance.
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