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On Wednesday, BMO Capital Markets maintained a positive outlook on CMS Energy (NYSE:CMS), a $19.6 billion utility company with an impressive 18-year dividend growth streak, by increasing its price target slightly from $76.00 to $77.00 while reaffirming an Outperform rating on the stock. According to InvestingPro analysis, CMS currently trades near its Fair Value, with analyst targets ranging from $59 to $78. Analysts at BMO Capital commented on the recent developments surrounding the company’s rate case, noting the Administrative Law Judge’s (ALJ) recommendation for an alternative Return on Equity (ROE) of 9.80%. This adjustment would result in an implied revenue requirement (RR) closer to $134 million, which is approximately 53% of CMS Energy’s original request, as opposed to the initial $109 million headline RR.
The analysts highlighted that this recommendation is more favorable than the staff’s suggestion and brings the figure more in line with expectations. They also pointed out that, given the constructive testimonies from intervenors and the precedent set by DTE Energy (NYSE:DTE)’s recent electric order, no significant surprises are anticipated in the final order, which is expected later in the first quarter of 2025.
Looking ahead, BMO Capital expects CMS Energy to provide an updated 2025 earnings per share (EPS) guidance range, details on the capital and financing plan, and revised load growth expectations during the fourth quarter 2024 earnings call, scheduled for February 6, 2025. With a current P/E ratio of 18.7x and a favorable PEG ratio of 0.5, InvestingPro subscribers can access detailed financial health metrics and 6 additional ProTips that provide deeper insights into CMS Energy’s investment potential.
The firm’s stance remains optimistic about CMS Energy’s stock performance, underpinned by the favorable regulatory developments and the company’s forthcoming updates. The new price target of $77 reflects BMO Capital’s confidence in the stock’s potential and its prospects for growth. The company’s low volatility profile, evidenced by a beta of 0.41, and consistent 3.14% dividend yield may appeal to stability-focused investors.
In other recent news, CMS Energy has witnessed significant developments. The company reported a substantial increase in its third-quarter earnings per share (EPS), which rose to $2.47, a $0.41 increase from the previous year. This growth was primarily due to positive outcomes in electric and gas rate cases. CMS Energy also confirmed its EPS guidance for 2024 to be between $3.29 and $3.35 and introduced its 2025 guidance, projecting an EPS of $3.52 to $3.58.
Jefferies recently raised the price target for CMS Energy to $77, maintaining a Buy rating, reflecting the firm’s positive outlook on the company’s performance and strategic investments. Despite potential challenges due to rising costs in insurance and IT that could result in a $0.15 per share negative variance, CMS Energy maintains a positive outlook, supported by strong capacity and energy market results.
BMO Capital Markets adjusted its price target on CMS Energy shares to $76, down from the previous $77, but maintained an Outperform rating. Meanwhile, the company has announced plans to file a 20-year renewable energy plan to align with Michigan’s clean energy targets. These are among the recent developments concerning CMS Energy.
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