Mizuho Securities has adjusted its price target for Northwestern Corp (NASDAQ: NASDAQ:NWE), a utility company, ahead of the firm's third-quarter earnings call set for October 30, 2024.
The price target was increased to $56.00, up from the previous $52.00, while the stock's rating remains at Neutral.
The adjustment reflects current market multiples and comes as Northwestern Corp's shares are trading at a roughly 10% price-to-earnings (P/E) discount compared to the broader utility group.
Despite this discount, the company's stock trades in line with its smaller market cap peers, including Avista (NYSE:AVA) Corp, Black Hills (NYSE:BKH) Corp, Texas New Mexico Power, and Portland General Electric (NYSE:POR), which all carry Neutral ratings as well.
Mizuho's stance is influenced by the ongoing challenges faced by Northwestern Corp and its peers, particularly in terms of regulatory outcomes, achieving long-term guidance, and managing wildfire risk.
The firm's analyst cited these factors as reasons for maintaining the Neutral rating, indicating a cautious approach until further clarity emerges from ongoing regulatory proceedings.
In other recent news, Northwestern Corp has been the subject of several key developments. Ladenburg Thalmann adjusted the price target for Northwestern Corp to $55.50, maintaining a neutral rating despite a lower EPS outlook for 2024.
The company's third-quarter earnings call revealed a forecast of $0.63 EPS, short of the consensus estimate of $0.72. Additionally, BofA Securities initiated coverage on Northwestern Corp with a Buy rating, projecting EPS for fiscal years 2024, 2025, and 2026 at $3.62, $3.71, and $3.91 respectively.
Northwestern Energy reported steady growth with a diluted EPS of $0.52 and a non-GAAP diluted EPS of $0.53 for the quarter ended June 30, 2024. The company also confirmed its 2024 diluted EPS guidance of $3.42 to $3.62. Significant strides were made in business operations, including strategic acquisitions such as Energy West Montana and substantial interest in Colstrip Units 3 and 4.
Board member Anthony Clark announced his upcoming resignation from Northwestern Energy, set to join the National Association of Regulatory Utility Commissioners as Executive Director-Elect. Lastly, the company declared a dividend of $0.65 per share and committed to a 5% dividend yield and 4% to 6% EPS growth. Northwestern Energy has invested over $1 billion in Montana's infrastructure with plans to invest an additional $1 billion by the end of 2024.
InvestingPro Insights
Adding to Mizuho's analysis, InvestingPro data reveals that Northwestern Corp (NWE) has a market capitalization of $3.35 billion and is currently trading at a P/E ratio of 16.04. This valuation metric aligns with Mizuho's observation of a discount compared to the broader utility group.
InvestingPro Tips highlight that NWE has maintained dividend payments for 20 consecutive years and has raised its dividend for 19 consecutive years. This consistent dividend history may be attractive to income-focused investors, especially given the current dividend yield of 4.75%. The company's commitment to dividends is particularly noteworthy in the context of Mizuho's cautious stance on regulatory challenges and long-term guidance.
Another relevant InvestingPro Tip indicates that NWE operates with a significant debt burden, which could be a factor in the ongoing challenges mentioned by Mizuho, particularly in terms of achieving long-term guidance. This insight provides additional context to the analyst's Neutral rating.
For investors seeking a more comprehensive analysis, InvestingPro offers 6 additional tips for NWE, which could provide further depth to the investment thesis beyond the scope of this article.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.