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On Thursday, BMO Capital Markets adjusted its outlook on Public Service Enterprise Group Inc. (NYSE:PEG), reducing the firm's price target on the utility company's shares to $83 from $86. The research firm upheld its Market Perform rating on the stock, which currently trades at $81.25. InvestingPro data shows the company has maintained dividend payments for an impressive 55 consecutive years, with a current yield of 3.08%.
The adjustment comes as BMO Capital Markets anticipates Public Service Enterprise Group to report first-quarter 2025 earnings per share (EPS) slightly above the consensus estimate at $1.46, marking an approximate 11% increase year-over-year. The analysts' focus is on the forthcoming earnings call scheduled for April 30, 2025, and particularly on any updates regarding the long-term contracts for the company's nuclear assets, which could drive the stock's relative performance. According to InvestingPro data, the company generated $10.29 billion in revenue over the last twelve months, with a gross profit margin of 34.41%.
In addition to the earnings expectations, BMO Capital highlighted investor interest in the outcome of the Long Island Power Authority (LIPA) grid management contract process, which experienced a delay in the decision last month. This aspect remains a point of attention for the market.
Despite the price target reduction, BMO Capital notes that the risk/reward balance for Public Service Enterprise Group is tilting more positively after the stock underperformed by nearly 10% year-to-date. Nonetheless, the firm points out that the stock is still trading at approximately a 14% premium compared to its peer group. InvestingPro analysis indicates the stock is currently overvalued based on its Fair Value model, with analyst targets ranging from $70 to $100 per share. Get access to the comprehensive Pro Research Report and 5+ additional ProTips for deeper insights into PEG's valuation and growth prospects.
The analyst's comments suggest a cautious stance, with the price target adjustment reflecting a mark-to-market (MTM) of the peer multiples in their sum-of-the-parts (SOTP) analysis. BMO Capital maintains the Market Perform rating, indicating no change in their neutral outlook on the company's shares.
In other recent news, Public Service Enterprise Group Inc. (PSEG) announced its fourth-quarter 2024 earnings, which exceeded analyst expectations with an earnings per share (EPS) of $0.84, surpassing the forecast of $0.83. The company also reported revenues of $2.46 billion, exceeding the anticipated $2.19 billion. In another financial development, PSEG successfully completed a $1 billion senior notes offering, comprising $600 million of 4.900% Senior Notes due 2030 and $400 million of 5.400% Senior Notes due 2035. Ladenburg Thalmann recently downgraded PSEG's stock from Buy to Neutral, driven by a revised earnings forecast and a lower EPS estimate for the years 2025 to 2027. This reflects a more conservative outlook on the company's ability to realize energy prices. Meanwhile, Jefferies adjusted PSEG's stock price target to $80 from $83, maintaining its Hold rating. The firm cited concerns over utility rates and market conditions in New Jersey as reasons for a cautious outlook. These developments are significant for investors keeping an eye on PSEG's financial trajectory and market performance.
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