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On Tuesday, Barclays (LON:BARC) analyst Nicholas Campanella upgraded CenterPoint Energy shares, traded on the New York Stock Exchange under the ticker (NYSE:CNP), from Underweight to Equalweight and raised the price target to $37.00 from the previous target of $30.00. The upgrade reflects the analyst’s view that the company’s management has effectively dealt with several challenging regulatory issues in recent times. The stock, currently trading near its 52-week high with a market capitalization of $23.8 billion, has delivered a solid 15.75% return year-to-date. According to InvestingPro analysis, the stock appears slightly overvalued at current levels.
According to Campanella, CenterPoint Energy has successfully navigated a number of politically sensitive regulatory execution items in the last quarter, including the CEHE rate case outcome and the Mobile generation proposal. These successful navigations have contributed to the improved outlook on the stock. The company’s stability is further evidenced by its impressive 55-year streak of consecutive dividend payments, making it an attractive option for income-focused investors.
The analyst also noted the possibility that CenterPoint Energy might increase its growth rate in the second half of 2025. However, Campanella expressed caution, pointing out that the stock’s potential for growth may already be reflected in its current price, which is at a 13% premium to its large cap peers. The analyst also mentioned that while the company’s balance sheet is considered average, there is potential for portfolio rotation due to the significant capital needs of Houston Electric.
Campanella suggested that any portfolio changes could be dilutive unless managed with creative financial engineering. With these considerations in mind, the analyst believes that the risk/reward profile for CenterPoint Energy is fairly balanced at this point. Investors are advised to look forward to the third-quarter update, where management is expected to provide a new long-term outlook.
In other recent news, CenterPoint Energy has made notable strides in its operations and financial outlook. The company recently welcomed two new directors, Manuel Miranda and Laurie Fitch, to its Board, enhancing its focus on utility resilience and customer service. Additionally, CenterPoint Energy is set to embark on its largest-ever System Reliability Plan (SRP), valued at $5.75 billion, which aims to support significant load growth by 2031. Analyst firms have been actively adjusting their outlooks on CenterPoint Energy, with Jefferies initiating coverage with a Buy rating and a price target of $42, citing improvements in the regulatory environment and disciplined operations.
BMO Capital Markets has also raised its price target to $36, following the approval of a rate case settlement that includes a favorable return on equity. Evercore ISI upgraded the stock rating to Outperform with a target of $37, anticipating favorable regulatory outcomes and increased investor confidence. Meanwhile, Mizuho (NYSE:MFG) Securities increased its price target to $34 while maintaining a Neutral rating, reflecting on CenterPoint’s effective management in regulatory matters and recent settlement approvals. These developments highlight CenterPoint Energy’s ongoing strategic initiatives and the positive reception from analysts regarding its future prospects.
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