NiSource Inc. (NYSE: NYSE:NI) saw its price target increased by an analyst at BMO Capital. The new target is set at $36.00, up from the previous $34.00, while the Outperform rating on the stock remains unchanged.
The adjustment follows a recent settlement agreement related to Columbia Gas of Pennsylvania, which is expected to have a favorable financial impact.
The settlement in question was filed with the Pennsylvania Public Utility Commission (PA PUC) on August 23. It involves an unopposed agreement that would allow Columbia Gas of PA to implement a net rate increase of approximately $74 million.
The figure is lower than the initially requested $124.1 million but is still seen as a positive development for the company.
The specifics of the settlement, including the return on equity (ROE) and the equity layer, have not been disclosed due to the confidential nature of such agreements in Pennsylvania. These "blackbox" settlements are common in the state and often do not reveal detailed financial parameters.
BMO Capital's decision to raise the target price for NiSource to $36 is based on a mark-to-market (MTM) of peer group multiples. This financial strategy involves adjusting the valuation of assets or portfolios to reflect current market values.
The analyst expressed confidence in maintaining an Outperform rating for NiSource, indicating a positive outlook on the stock's performance.
NiSource, through its subsidiary Columbia Gas of Pennsylvania, is poised to benefit from the approved rate increase, which is now set to take effect.
In other recent news, NiSource recently closed a $500 million debt offering in the form of Fixed-to-Fixed Reset Rate Junior Subordinated Notes. These notes, issued under a Terms Agreement with a group of underwriters including BofA Securities, Goldman Sachs, and J.P. Morgan Securities, will provide financing for general corporate purposes, including capital expenditures and debt repayment.
On the earnings front, NiSource reported Q2 2024 earnings that exceeded expectations, leading BMO Capital to raise the share target to $34. The company also completed approximately $500 million of its 2024 equity issuance plan and projects a 6% to 8% adjusted EPS growth and 8% to 10% rate base growth from 2023 to 2028. In addition, NiSource announced a quarterly dividend of $0.265 per share.
InvestingPro Insights
Amidst the positive outlook following the recent settlement agreement, NiSource Inc. (NYSE:NI) presents a mixed financial landscape according to InvestingPro data. With a market capitalization of $15.05 billion and a P/E ratio standing at 19.8, the company showcases stability in its valuation metrics. Notably, NiSource has maintained dividend payments for an impressive 38 consecutive years, and the dividend yield currently sits at a robust 3.16%. This commitment to shareholder returns is complemented by a dividend growth of 6.0% over the last twelve months as of Q2 2024.
InvestingPro Tips highlight that NiSource is trading near its 52-week high, with the price at 99.17% of this peak, reflecting a strong return over the last three months of 20.15%. This uptrend is consistent with the year-to-date price total return of 30.01%, indicating a robust performance in the market. For investors seeking detailed analytical insights and additional InvestingPro Tips, there are 11 more tips available, which can further inform investment decisions regarding NiSource.
These financial metrics and trends provide a comprehensive picture of NiSource's current market position, which is particularly relevant for investors considering the stock following the analyst's updated price target and the company's recent settlement agreement.
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