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On Tuesday, BMO Capital Markets adjusted its outlook on Sempra Energy (NYSE:SRE) shares, reducing the price target to $78 from the previous $92 while maintaining an Outperform rating. This change follows the company’s fourth-quarter results released last week, which included a downward revision of its 2025 guidance. The stock, currently trading at $71.44 with a market capitalization of $46.5 billion, has seen a significant decline of 18.6% year-to-date, according to InvestingPro data.
The updated guidance from Sempra Energy surprised investors, prompting an 11% average reduction to the 2025-2029 earnings per share (EPS) estimates previously held by BMO and the consensus. Despite the lower guidance, Sempra Energy has communicated a new base that supports a sustainable long-term growth rate of 7-9%. InvestingPro data shows the company maintains a solid 3.61% dividend yield and has raised its dividend for 14 consecutive years, demonstrating commitment to shareholder returns despite market challenges.
The analysts at BMO Capital noted that Sempra Energy’s revised $56 billion capital plan is expected to drive a 10% growth in the rate base. The decision to maintain an Outperform rating reflects BMO’s continued positive outlook on the company’s stock despite the recent adjustments. With a P/E ratio of 16.01 and projected revenue growth of 34% for the current year, InvestingPro analysis reveals 8 additional key insights about Sempra’s financial health and growth potential in their comprehensive Pro Research Report.
In explaining the revised price target, BMO Capital stated, "Our target price goes to $78 as we mark-to-market our peer multiples and adjust our prior relative premiums to be conservative." This indicates a recalibration of the valuation in line with market conditions and a more cautious approach to the company’s premium compared to its peers.
Sempra Energy’s new capital plan and guidance adjustments are pivotal factors in BMO’s analysis, as the firm recalibrates expectations while still signaling confidence in the company’s performance potential.
In other recent news, Sempra Energy has experienced several changes in analyst ratings and price targets following its fourth-quarter earnings report and revised guidance for 2025. Jefferies downgraded Sempra Energy from "Buy" to "Hold," lowering the price target from $96.00 to $77.00, citing concerns about the company’s financial stability and regulatory challenges. Barclays (LON:BARC) also downgraded the stock, moving it from Overweight to Equal Weight, with a reduced price target of $72, highlighting significant financial adjustments and lowered earnings per share estimates through 2029. Meanwhile, BofA Securities maintained a Buy rating but adjusted its price target from $94.00 to $86.00, noting a potential 22% upside despite a revised financial outlook.
Guggenheim Securities, while maintaining a Buy rating, decreased its price target to $87, pointing out the lack of clarity in Sempra’s earnings call and skepticism about the company’s long-term EPS growth guidance. Mizuho (NYSE:MFG) Securities also lowered its price target from $92.00 to $76.00, keeping an Outperform rating, after Sempra’s guidance for 2025 fell short of expectations and raised concerns about execution capabilities. These recent developments reflect a cautious approach by analysts due to regulatory uncertainties and revised financial projections. Despite the adjustments, some analysts still see potential value in Sempra Energy’s stock, albeit with a more conservative outlook.
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