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On Monday, BMO Capital Markets adjusted its price target on PG&E Corporation (NYSE:PCG) stock, reducing it from $23.00 to $22.00, while maintaining an Outperform rating. The revision follows recent investor meetings hosted by BMO Capital with PG&E’s senior management, which bolstered the firm’s confidence in the utility company’s strategic direction.
According to BMO Capital, the discussions with PG&E’s leadership reinforced the analyst’s belief in the company’s business plan, regulated growth story, and the advancements made in mitigating wildfire risks. California’s legislative environment, particularly the framework established by AB 1054, which is aimed at addressing wildfire-related issues, was also noted as a positive factor for the company’s outlook.
PG&E has been working on enhancing its wildfire risk management strategies, a critical aspect for utilities operating in California, a state prone to devastating wildfires. BMO Capital highlights the ongoing efforts by key stakeholders to ensure the sustainability of California’s wildfire fund and to manage the liability cap, which are considered essential for revealing the full potential of PG&E’s premium profile in the market.
The price target adjustment to $22.00 is a result of BMO Capital marking to market its sum-of-the-parts (SOTP) valuation of PG&E. Despite the slight decrease in the price target, BMO Capital reaffirms its Outperform rating, signaling a positive outlook on the stock’s performance relative to the market.
In other recent news, PG&E Corporation reported its fourth-quarter earnings for 2024, revealing a slight miss on both earnings per share (EPS) and revenue compared to forecasts. The company posted an EPS of $0.31, slightly below the expected $0.32, and revenues of $6.63 billion, falling short of the forecasted $7.19 billion. Despite this, BMO Capital Markets has raised its price target for PG&E from $21.00 to $23.00, maintaining an Outperform rating, citing the company’s strong operational performance and updated 2025 EPS guidance of $1.48 to $1.52. Additionally, Moody’s Ratings has upgraded PG&E Corporation and Pacific Gas & Electric’s ratings, reflecting the company’s progress in reducing wildfire risk and strengthening its financial profile. These developments come as PG&E continues to invest in wildfire mitigation, with over $20 billion spent since 2020, and plans to bury 10,000 miles of power lines in high-risk areas over the next decade. The stable outlooks from Moody’s are based on PG&E’s ongoing efforts to reduce wildfire risk and maintain access to California’s wildfire insurance fund. Meanwhile, PG&E completed a $2.75 billion equity offering in December 2024, supporting its capital investment plans and operational strategies.
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