On Wednesday, Mizuho Securities updated its outlook on Xcel Energy (NASDAQ:XEL), raising the price target to $70.00 from $64.00, while reiterating an Outperform rating on the stock. The firm anticipates a significant end to the year for Xcel Energy, with several key regulatory decisions and filings on the horizon.
Final verdicts on gas cases in Minnesota, North Dakota, and Colorado, which collectively represent approximately 15% of the company's earnings, are expected in the fourth quarter of 2024. These cases include settlements in Minnesota and North Dakota, with the Colorado case likely proceeding to litigation.
Xcel Energy is also set to update its capital plan during the third-quarter earnings call and is preparing to file its Minnesota electric case, which accounts for around 30% of earnings, as well as a system resiliency plan in Texas. Both filings are slated for the fourth quarter of 2024.
Additionally, the Midcontinent Independent System Operator (MISO) is scheduled to announce the awards for Tranche 2.1 projects by the end of the year. These developments are seen as pivotal for Xcel Energy's regulatory strategy moving forward.
According to the analyst, Xcel Energy's shares are currently trading at a roughly 4% price-to-earnings (P/E) discount compared to its peer group. The analyst suggests that the stock has the potential to re-rate to a mid-single digit premium as the company progresses with its regulatory plans. The increased price target of $70 reflects current market multiples and implies a projected 5% P/E premium to the company's peer group.
In other recent news, Xcel Energy has been the center of analyst attention, with Jefferies initiating a Hold rating and a $70 price target. This evaluation was influenced by the Smokehouse Fire incident but deemed financially benign. The firm believes the company's above-average growth potential and premium financial profile warrant its current valuation. Meanwhile, Argus upgraded Xcel Energy's stock rating from Hold to Buy, citing the stock's favorable trading position. KeyBanc maintained its Overweight rating and a $65 price target, emphasizing Xcel Energy's growth strategies and commitment to decarbonization. Goldman Sachs increased its price target to $73, highlighting the company's anticipated rate base growth and projected earnings growth.
Xcel Energy reported an earnings per share of $0.54 and a significant $1.7 billion investment in energy infrastructure. It also reaffirmed its 2024 earnings guidance, emphasizing its commitment to investing in resilient infrastructure and clean energy. Todd Wehner was appointed as the new treasurer and vice president, bringing a wealth of experience in financial management, treasury operations, and investment banking to the utility company.
The company has been managing the aftermath of the Smokehouse Creek wildfire, having settled 43 out of 141 claims. The Texas Commission also approved a $13 million distribution rider request, which is expected to reduce the need for future rate cases. These recent developments indicate Xcel Energy's active management of challenges and its continued commitment to growth and sustainability.
InvestingPro Insights
As Xcel Energy (NASDAQ:XEL) navigates a period of significant regulatory developments, investors are closely monitoring the company's financial health and market performance. According to InvestingPro data, Xcel Energy boasts a market capitalization of $35.77 billion and a P/E ratio of 19.15, with a slight adjustment in the last twelve months as of Q2 2024 to 17.86. This suggests a robust valuation, but it's worth noting that the company's P/E is trading at a high ratio relative to near-term earnings growth, with a PEG ratio of 3.02.
InvestingPro Tips highlight Xcel Energy's strong track record of dividend reliability, having raised its dividend for 20 consecutive years and maintained payments for 53 consecutive years. This consistency is a testament to the company's financial stability and commitment to shareholder returns. Moreover, analysts have revised their earnings upwards for the upcoming period, reflecting optimism about the company's profitability. Indeed, Xcel Energy is not only predicted to be profitable this year but has also been profitable over the last twelve months. Furthermore, the stock is trading near its 52-week high, underscoring the positive sentiment in the market.
For investors seeking more in-depth analysis and additional insights, there are over 8 InvestingPro Tips available, which can be accessed for Xcel Energy at Investing.com/pro. This further analysis may provide valuable context as the company approaches its next earnings date on October 24, 2024, and continues to navigate the regulatory landscape.
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