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On Friday, BofA Securities analyst Ross Fowler adjusted the price target for MDU Resources (NYSE:MDU) shares, bringing it down to $19.00 from the previous $20.00, while continuing to recommend a Buy rating for the stock. The revision follows MDU’s announcement of its fiscal year 2025 earnings guidance, which indicated a potential earnings per share (EPS) range of $0.88 to $0.98. This forecast fell short of BofA Securities’ earlier estimate of $0.97 and suggested a variable EPS growth rate ranging from a 2% decrease to an 8% increase from the fiscal year 2024 EPS of $0.90. Currently trading at $16.93, InvestingPro analysis indicates MDU is undervalued, with a "GREAT" overall Financial Health Score of 3.09.
MDU Resources experienced a 6% decline in stock price after releasing its guidance for fiscal year 2025. Despite this, BofA Securities reaffirms its Buy rating, emphasizing that the foundational elements supporting their positive outlook remain intact. The firm anticipates that MDU Resources can achieve an above-average 6-8% compound annual growth rate (CAGR) in EPS, based on the midpoint of the company’s provided guidance for fiscal year 2025. InvestingPro data reveals impressive performance metrics, including a 59% return over the past year and a solid 3.07% dividend yield. For deeper insights and additional ProTips about MDU, including its 54-year dividend maintenance streak, subscribers can access the comprehensive Pro Research Report.
The analyst highlighted MDU’s highly visible data center contracts as a key factor contributing to an elevated return on equity (ROE) compared to other small to mid-cap utilities. Additionally, the company’s regulatory diversity is seen as a strength that enhances its defensiveness in the market.
In summary, despite the lowered price target, BofA Securities maintains confidence in MDU Resources’ long-term growth prospects and its ability to deliver on its earnings growth targets. The firm’s analysis suggests that MDU’s strategic contracts and diversified regulatory environment position it favorably for future performance.
In other recent news, MDU Resources Group Inc. reported its Q4 2024 earnings, falling short of analyst expectations. The company posted earnings per share (EPS) of $0.34, missing the forecasted $0.3006. Revenue also failed to meet expectations, coming in at $535.5 million against an anticipated $789.62 million. In addition, MDU Resources completed a significant spin-off of Everest Construction Group and anticipates a $3.1 billion capital investment over the next five years. Despite surpassing the EPS forecast, the significant revenue shortfall could impact investor confidence and future growth prospects. These are recent developments that investors should take into consideration. Analysts from various firms have been providing their analysis and projections, but it’s essential to note that these are their views, not the company’s.
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