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Monday, Avista Corporation (NYSE:AVA), currently trading at $36.53, received a reiterated Underperform rating from BofA Securities, with a maintained price target of $35.00. According to InvestingPro data, analyst targets range from $35 to $49, with three analysts recently revising earnings estimates downward.
The Washington Utilities and Transportation Commission (WUTC) issued a Final Order on December 23, 2024, concerning Avista's multi-year electric and natural gas general rate cases. The commission approved a smaller rate increase than Avista had requested for both electric and natural gas services.
For the electric division, the WUTC sanctioned an $11.9 million increase for the first rate year and a $68.9 million increase for the second rate year, which is net of $44.4 million attributed to Colstrip. These approved amounts are lower than Avista's requested increases of $77.1 million for the first year and $78.1 million for the second year. In the case of natural gas, the commission agreed to a $14.2 million increase in the first rate year and a $4.0 million increase in the second year, compared to Avista's request of $17.3 million and $4.6 million, respectively.
Overall, the WUTC's Final Order granted 52% of Avista's two-year electric revenue proposal and 83% of its two-year natural gas revenue request. The order also established a return on equity (ROE) of 9.8%, an increase from the previously authorized 9.4% in 2021, and set a 48.5% equity ratio. Notably, InvestingPro data shows Avista has maintained dividend payments for 54 consecutive years, currently offering a substantial 5.2% yield.
In light of the WUTC's decision, which resulted in higher revenue increases than BofA Securities had anticipated, the firm has adjusted its estimates for Avista upwards for the years 2025 through 2028. Despite this adjustment, BofA Securities has maintained its Underperform rating on Avista stock, reflecting their assessment of the company's future performance relative to the market.
InvestingPro's comprehensive analysis indicates the stock is currently overvalued, with a P/E ratio of 14.45 and an overall financial health score rated as "GOOD". Get access to the full Pro Research Report for deeper insights into Avista's valuation and growth prospects.
In other recent news, Avista Corporation reported an increase in consolidated earnings of $0.23 per diluted share in the third quarter, up from $0.19 from the same period of the previous year. However, the company lowered its full-year 2024 earnings guidance due to higher power supply costs and other expenses.
Meanwhile, the Washington Utilities and Transportation Commission (WUTC) approved Avista's rate increases for both electric and natural gas services, albeit at lower amounts than initially requested. In response to these developments, financial firms BofA Securities and Jefferies have maintained their respective Underperform and Hold ratings on Avista's stock.
In the financial analysis sector, BofA Securities adjusted its estimates for Avista upward for the years 2025 through 2028, while Jefferies cited potential for return on equity (ROE) improvement. Both firms, however, emphasized the need for Avista to navigate its regulatory environment effectively.
Avista's recent developments include significant investments in renewable energy and infrastructure, such as the completion of the Clearwater Wind Project and ongoing projects like the North Plains Connector Transmission Project.
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