By Sam Boughedda
The weakness in Exelon Corp. (NASDAQ:EXC) stock post-IRA is overdone, according to a Wolfe Research analyst.
The analyst, who has an Outperform rating and a $49 price target on the stock, said following a recent investor meeting with Exelon management, they believe the stock hit from the Inflation Reduction Act is overstated.
"EXC has reaffirmed its 6-8% EPS growth target through 2025 despite the IRA impact," explained the analyst. "Another takeaway is upside to ComEd returns from a higher 30Y UST yield in 2022-23 and from higher allowed ROEs and potential incentives under multiyear rate plans beginning in 2024."
"While the stock is beating the UTY by ~230bp YTD, it has meaningfully lagged since the IRA was announced. EXC now trades at a ~1.5x discount to the utility avg P/E on 2024E. Our PT remains $49, reflecting a half-turn premium to our group avg P/E, given EXC's low-risk T&D business and above avg LT EPS/div growth," the analyst added.
The firm views Exelon's recent weakness as "more messaging than fundamentals" and believes this should be fixable in time, adding that the company's business is "a lot more stable than the recent news flow would suggest."