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On Wednesday, BofA Securities analyst Ross Fowler revised the price target for Sempra Energy (NYSE:SRE) shares, bringing it down from $94.00 to $86.00, while reaffirming a Buy rating on the stock. According to InvestingPro data, the utility company, currently valued at $44.9 billion, trades at a P/E ratio of 15.5x. Fowler addressed the recent 19% drop in Sempra Energy’s stock value, describing it as an excessive reaction and recognizing the investment potential following what he refers to as a transition year in 2025. InvestingPro data confirms this decline, showing a YTD return of -19.47%, with technical indicators suggesting the stock is currently in oversold territory. For investors seeking deeper insights, InvestingPro offers additional technical analysis and 8 more proprietary tips for Sempra Energy.
Sempra Energy’s management, including CEO Jeff Martin, attempted to provide clarity during a recent call, with Martin asserting the company’s expectation for earnings per share (EPS) growth to surpass 9% in both the near and long term. Fowler noted that the market anticipated an increased outlook in the fourth-quarter update, which may have contributed to the stock’s sharp decline when the guidance was revised downward.
Fowler expressed surprise at the significant cut in the company’s EPS growth forecast, especially given Sempra’s history of navigating regulatory and economic challenges. In response to the updated guidance, BofA Securities has adjusted its model and valuation to incorporate a more cautious approach.
Despite the lower price objective, Fowler still sees a 22% potential upside for Sempra Energy’s shares. He highlighted that the company is projected to deliver above-average sector EPS growth of 7-9% between 2025 and 2029. Fowler’s reiteration of the Buy rating underscores his confidence in the company’s value proposition despite the recent adjustments to its financial outlook.
In other recent news, Sempra Energy reported its fourth-quarter 2024 earnings, which fell short of market expectations. The company announced an earnings per share (EPS) of $1.50, missing the forecasted $1.58, and revenue of $3.76 billion, below the anticipated $4.9 billion. Following this, Guggenheim Securities lowered its price target for Sempra Energy to $87, maintaining a Buy rating, while Mizuho (NYSE:MFG) Securities reduced its target to $76, retaining an Outperform rating. Goldman Sachs downgraded Sempra Energy from Buy to Neutral, setting a new price target of $76. Analysts cited the company’s revised 2025 guidance, which projected earnings between $4.30 and $4.70, significantly lower than the previous $5.15 estimate, as a reason for their adjustments.
The revised guidance was attributed to unfavorable rate outcomes in California, regulatory delays in Texas, and increased expenses at the parent company level. Despite these challenges, Sempra announced a new capital plan of $56 billion for 2025-2029, focusing on infrastructure investments in Texas and California. The company aims for EPS growth of 9% or higher through 2029, with Texas and California remaining key growth areas. Analysts expressed concerns about Sempra’s ability to execute its plans effectively, with Mizuho analysts noting the importance of the company’s confidence in achieving the higher end of their projections.
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