On Monday, Wells Fargo resumed coverage on Southwest Gas Holdings Inc (NYSE:SWX) stock by assigning an Equal Weight rating and establishing a price target of $77.00.
The firm noted that Southwest Gas has shown notable performance, with a year-to-date (YTD) increase of 22% compared to the median of Gas Local Distribution Companies (Gas LDC) at 2% and the S&P Utilities sector's 14% rise.
The firm attributed the company's impressive performance to several factors. Notably, the robust growth in construction multiples, which have climbed 33% YTD, and the successful execution of the initial public offering (IPO) for Centuri Group, a subsidiary of Southwest Gas.
These achievements have been pivotal, especially considering the subsequent opportunities for debt reduction and share repurchase.
Further, Wells Fargo highlighted that positive regulatory developments have contributed to Southwest Gas's strong market narrative. These include a settlement in Nevada and an outcome in Arizona regarding a docket on regulatory lag, both of which have been favorable for the company.
Southwest Gas's stock performance stands out in the utilities sector, which typically sees more modest gains. The company's strategic moves, including the Centuri IPO and proactive regulatory engagement, have been instrumental in its recent success.
Wells Fargo's current price target suggests that while Southwest Gas has had a solid run, the firm anticipates the stock to perform in line with the broader market expectations going forward. The Equal Weight rating reflects a neutral perspective on the stock's potential for future price movement.
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