US stock futures edge lower after S&P 500 hits record high; PCE data in focus
Investing.com - BMO Capital has reiterated its Outperform rating and $68.00 price target on Black Hills Corp (NYSE:BKH), according to a research note published Tuesday. Currently trading at $60.25, the stock appears slightly overvalued according to InvestingPro’s Fair Value model.
The firm’s analysis focused on Black Hills’ Large Power Contract Service (LPCS) tariff, which BMO described as "capital-light" and potentially misunderstood by investors.
BMO noted that while these contracts exist outside the traditional regulated structure, they maintain "regulated-like" earnings characteristics that provide stability and visibility similar to traditional utility investments.
The research highlighted ongoing discussions between Black Hills and Crusoe/Tallgrass, which were disclosed during the company’s second quarter 2025 earnings call.
BMO explained that the microgrid management fee driving net income is anchored in "avoided cost" rate base calculations, providing the stability that utility investors typically value, even though the exact inputs remain "somewhat opaque."
In other recent news, Black Hills Corp announced a significant all-stock merger with NorthWestern Energy, valued at approximately $15.4 billion. This strategic move has been unanimously approved by the boards of both companies and aims to create a regional regulated utility with a combined market capitalization of about $7.8 billion. In terms of the merger agreement, NorthWestern shareholders will receive 0.98 shares of Black Hills for each NorthWestern share, with Black Hills shareholders owning 56% of the combined entity. Additionally, Black Hills recently reported its Q2 2025 earnings, meeting earnings per share expectations with $0.38 and surpassing revenue forecasts by reaching $439 million, compared to the anticipated $412.68 million. Following these developments, BofA Securities upgraded Black Hills’ stock from Underperform to Neutral, citing the merger outlook as a key factor. The firm also raised its price target for Black Hills to $64.00 from $57.00. These developments highlight significant changes and expectations for Black Hills Corp in the near future.
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