BMO raises Duke Energy stock target to $128, keeps Outperform rating

On Tuesday, BMO Capital Markets updated its outlook on Duke Energy Corporation (NYSE:DUK), increasing the price target to $128 from the previous $123 while maintaining an Outperform rating on the stock. The adjustment follows a meeting with Duke Energy’s senior management, including the incoming CEO Harry Sideris and CFO Brian Savoy, along with Chris Jacobi and Paige Swofford from the investor relations team. The utility giant, currently valued at $91.7 billion, has shown strong momentum with a 28% return over the past year and trades near its 52-week high of $121.25. According to InvestingPro data, the company has maintained dividend payments for an impressive 55 consecutive years, demonstrating remarkable financial stability.

The BMO Capital analyst highlighted Duke Energy’s clean regulatory environment and defensive profile, coupled with a clear path to growth, as key factors for the positive assessment. The analyst expects these elements will contribute to the company’s ability to expand its multiples through ongoing execution of its business plan. This outlook is supported by Duke’s solid financial health, earning a "GOOD" overall score from InvestingPro’s comprehensive analysis, which evaluates multiple factors including growth, profitability, and price momentum. The company’s defensive nature is reflected in its low beta of 0.47, indicating less volatility compared to the broader market.

During the meeting with Duke Energy’s management, the BMO Capital analyst gained further confidence in the company’s strategic direction. The analyst’s updated price target reflects a revision of peer multiples used in the sum-of-the-parts (SOTP) valuation, indicating a belief in the company’s strong market position and potential for share price appreciation. The company’s fundamentals support this optimism, with revenue growing at 4.7% and an attractive PEG ratio of 0.34, suggesting reasonable valuation relative to growth. For deeper insights into Duke Energy’s valuation and growth prospects, investors can access the comprehensive Pro Research Report available on InvestingPro, which covers over 1,400 top US stocks.

The analyst’s remarks underscored Duke Energy’s prospects: "Clean Regulatory & Defensive Profile With Visible Growth Inflection; We hosted a meeting with DUK senior management including incoming CEO Harry Sideris, CFO Brian Savoy, and Chris Jacobi and Paige Swofford from the investor relations team. Our meeting reaffirmed our positive outlook on shares of DUK as we continue to see a low-touch regulatory calendar and defensive profile with a visible growth inflection driving multiple expansion with continued execution. Our target price goes to $128 as we mark to market the peer multiples used in our SOTP valuation. We maintain our Outperform rating."

Duke Energy’s focus on maintaining a low-touch regulatory calendar and defensive profile, according to BMO Capital, positions it well for a growth inflection that could lead to an increased valuation for the company’s stock. With a current dividend yield of 3.5% and a track record of raising dividends for 17 consecutive years, Duke Energy continues to demonstrate its commitment to shareholder returns while maintaining its position as a prominent player in the Electric Utilities industry.

In other recent news, Duke Energy has announced enhancements to its assistance programs for low-income households in North Carolina, aiming to provide more substantial energy savings by 2025. These updates include increased incentives for weatherization services and the introduction of an income-qualified demand response program, offering free smart thermostats and bill credits for energy reduction during peak times. Additionally, Jefferies has raised its price target for Duke Energy to $132, maintaining a Buy rating while noting a 6.8% earnings per share compound annual growth rate. Meanwhile, Goldman Sachs has adjusted its price target to $122, maintaining a neutral stance due to concerns about the company’s balance sheet and earnings execution. Mizuho (NYSE:MFG) has also increased its price target to $122, upholding an Outperform rating, citing Duke Energy’s solid balance sheet and growth forecast. BMO Capital Markets has slightly reduced its price target to $123 while maintaining an Outperform rating, acknowledging challenges in operational expenses but expressing optimism for long-term growth. These developments reflect Duke Energy’s ongoing efforts to manage financial expectations and support customer needs.

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