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On Monday, BMO Capital Markets adjusted its financial outlook for Emera Inc. (EMA:CN) (OTC: EMRAF), increasing the price target to Cdn$60.00, up from the previous Cdn$58.00. The firm reiterated its Outperform rating on the utility company’s stock.
The adjustment follows Emera’s fourth quarter results of 2024, which indicated an expected positive shift in earnings per share (EPS) for 2025. According to BMO Capital’s analysis, this anticipated growth is primarily driven by new rate structures at Tampa Electric. The firm’s projected EPS for 2025 suggests an approximate 10% growth, surpassing the mid-single digits average of its utility peers.
BMO Capital’s analyst highlighted the potential for increased cash flows and the anticipated sale of New Mexico Gas by the end of the year as factors that could mitigate credit rating concerns. Currently, Moody’s (NYSE:MCO) and Fitch maintain a Negative outlook on the company. The firm anticipates that these developments could lead to an improvement in market sentiment towards Emera.
The valuation of Emera’s shares also played a role in maintaining the Outperform rating. BMO Capital noted that Emera’s stock offers decent value at 17 times price-to-earnings (P/E) ratio, compared to Fortis Inc (TSX:FTS). at 18 times and Hydro One at 20 times P/E. The new price target is based on an 18 times P/E ratio, an increase from the previous 17.5 times.
Emera Inc. is poised for a promising year according to BMO Capital’s analysis, with strategic moves expected to enhance the company’s financial stability and attractiveness to investors. The raised price target reflects confidence in Emera’s growth trajectory and its potential to outperform within the utility sector.
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