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On Thursday, Avista Corporation (NYSE:AVA) saw its price target increased by Jefferies from $39.00 to $43.00, while the firm kept a Hold rating on the stock. Currently trading at $39.59 and near its 52-week high of $40.23, InvestingPro analysis suggests the stock is trading above its Fair Value. The adjustment follows Avista’s forecast for fiscal year 2025, which surpassed expectations, and the company’s strong return on equity (ROE) trends of 7%, attributed to the Washington Multi-Year Rate Plan (MYRP).
The analyst at Jefferies highlighted the potential modifications to the Energy Recovery (NASDAQ:ERII) Mechanism (ERM) but noted that these changes are not anticipated until the next Washington rate case. The firm also pointed out that while the Request for Proposals (RFP) for the 2029-2030 capacity could lead to long-term upside for Avista, the development of these outcomes will require time and carries a degree of uncertainty. With a market capitalization of $3.17 billion and revenue growth of 10.62% in the last twelve months, InvestingPro data shows the company maintains strong fundamentals.
The revised price target reflects the analyst’s updated earnings per share (EPS) estimates, which have been increased in light of the company’s strong guidance and performance. Trading at a P/E ratio of 17.32x, the stock has demonstrated remarkable stability with 22 consecutive years of dividend increases. The WA MYRP has been a significant factor in driving Avista’s ROE trends, which in turn have influenced the analyst’s outlook on the stock.
Despite the potential for long-term growth, the Hold rating suggests that Jefferies views the stock as fairly valued at current levels, with the anticipated benefits from the future RFP outcome already factored into the price target.
Investors in Avista will likely continue to monitor the company’s progress, especially with regard to the upcoming rate case and the RFP for future capacity, both of which could have material impacts on the company’s financials and stock performance.
In other recent news, Avista Corporation reported its fourth-quarter 2024 earnings with an earnings per share (EPS) of $0.84, which did not meet the forecasted $0.89. However, the company’s revenue surpassed expectations, reaching $517 million compared to the anticipated $487.48 million. Despite the EPS miss, Avista’s stock saw a positive market reaction, likely due to the revenue beat. The company has set its earnings guidance for 2025 between $2.52 and $2.72 per share. Avista also announced plans for significant capital investments, with $525 million set for 2025 and a total of $3 billion planned through 2029. These developments come amid Avista’s strategic focus on infrastructure, as noted by CEO Heather Rosentrader and CFO Gavin Christie during the earnings call. Additionally, Avista’s regulatory strategy has been pivotal, with positive outcomes in Washington’s general rate cases. The company also highlighted ongoing efforts in wildfire mitigation and infrastructure improvements.
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