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On Monday, BMO Capital Markets adjusted its outlook on CMS Energy (NYSE:CMS), with analyst James Thalacker revising the company’s price target downward to $77 from the previous $80, while still maintaining an Outperform rating on the stock. According to InvestingPro data, CMS Energy, currently valued at $22 billion, trades at a P/E ratio of 22.05 and has delivered an impressive YTD return of 8.6%. Thalacker’s assessment comes as he updates the first quarter 2025 earnings estimate for CMS Energy to $1.00, up from $0.97 reported in the first quarter of 2024.
The analyst anticipates a favorable comparison year-over-year, attributing this to the recovery from substantial weather-related challenges faced in the same period last year. He notes that both gas and electric rate relief, along with revenue from renewable projects associated with the Power Supply Cost Recovery (PSCR) mechanism, are contributing to the positive outlook. InvestingPro analysis reveals that CMS Energy has maintained an impressive track record of raising dividends for 18 consecutive years, with a current dividend yield of 3.02%. However, these gains are somewhat tempered by an increase in utility operational expenditures, higher one-time storm-related maintenance and operation costs, a reduced contribution from NorthStar, and a greater year-over-year financial drag at the Corporate/Other segment.
Despite the reduced price target, BMO’s stance on CMS Energy remains bullish, with the Outperform rating indicating the firm’s confidence in the company’s potential to outperform the market or its sector peers. The adjustment to the target price reflects a realignment with peer group multiples, ensuring that CMS Energy’s valuation is in line with the broader market trends.
CMS Energy’s stock performance and investor expectations will likely continue to be influenced by the company’s ability to navigate operational expenses and leverage rate reliefs and renewable project revenues. BMO’s updated assessment and price target provide a current perspective on the company’s financial health and future prospects in the utility sector.
In other recent news, CMS Energy reported fourth-quarter earnings that matched analyst expectations, with adjusted earnings per share at $0.87. However, revenue for the quarter was $1.99 billion, falling short of the $2.11 billion consensus estimate. The company raised its 2025 earnings guidance, projecting adjusted earnings per share between $3.54 and $3.60, slightly above the previous range. Additionally, CMS Energy announced an increase in its quarterly dividend to 54.25 cents per share, up from 51.50 cents, resulting in an annualized yield of approximately 3.2 percent.
BMO Capital Markets maintained its Outperform rating on CMS Energy and increased the stock price target to $80, following a favorable ruling from the Michigan Public Service Commission that granted the company a $176 million revenue boost. Barclays (LON:BARC) also upgraded CMS Energy’s stock from Equalweight to Overweight, raising the price target to $75, citing potential earnings growth from energy efficiency and renewable energy initiatives. The company has consistently demonstrated its commitment to shareholder returns, marking the 19th consecutive year of dividend increases. These developments reflect a positive outlook for CMS Energy amid a cooperative regulatory environment in Michigan.
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