On Friday, Mizuho Securities adjusted its outlook on PG&E Corporation (NYSE:PCG), raising the price target to $23.00 from the previous $21.00. The firm continues to endorse a Buy rating for the utility company's stock.
The increase in the price target comes after careful consideration of various aspects of PG&E's business. Mizuho's approach included valuing the regulated electric distribution and transmission component of PG&E at $18.50.
This valuation applies a roughly 5% discount to the average price-to-earnings (P/E) multiple of the electric utility group. The discount reflects the ongoing uncertainty surrounding regulations in California, which could impact the company's performance.
Additionally, Mizuho estimated the value of PG&E's regulated gas utility segment at $6.00, also applying a similar 5% discount to the gas utility P/E multiple. This discount takes into account the same regulatory uncertainties that affect the electric segment of the business.
To arrive at the final price target, Mizuho made further adjustments for unallocated debt, reducing the projected target by $1.50. This comprehensive analysis led to the new price target of $23.00, which indicates a positive outlook on PG&E's stock while acknowledging the potential risks associated with regulatory factors in its operational environment.
InvestingPro Insights
PG&E Corporation (NYSE:PCG) has been under the lens of analysts and investors alike. With Mizuho Securities recently raising their price target, it's pertinent to look at some key metrics and expert insights. According to InvestingPro data, PG&E has a market capitalization of $39.43 billion and trades at a P/E ratio of 16.08, which adjusts to 14.01 when considering the last twelve months as of Q1 2024. The company's revenue growth over the same period stands at 9.0%, signaling a robust financial performance despite a quarterly revenue dip of -5.6% in Q1 2024.
InvestingPro Tips highlight that PG&E is trading near its 52-week high, with the stock price at 99.09% of this peak. This aligns with the stock's low price volatility and could be an indicator of market confidence or a potential reevaluation point as it teeters on overbought territory, as suggested by the Relative Strength Index (RSI). Analysts also predict the company will maintain profitability this year, a continuation of its performance over the last twelve months. For investors looking for a deeper dive into PG&E's financials, InvestingPro offers additional insights and metrics. Utilize the coupon code PRONEWS24 to receive an extra 10% off a yearly or biyearly Pro and Pro+ subscription, and access over six additional InvestingPro Tips for PG&E at https://www.investing.com/pro/PCG.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.