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On Thursday, Citi analyst Ryan Levine increased the price target for Atmos Energy (NYSE:ATO) from $148.00 to $163.00, while keeping a Neutral rating on the stock. According to InvestingPro data, the stock currently trades at $155.97, with analyst targets ranging from $137 to $181. The adjustment reflects several key developments, including a productive discussion with the Texas Railroad Commission (RRC) Chair, a widening of gas spreads, and an uplift in the fiscal year 2025 earnings guidance from $7.15-$7.25 to $7.20-$7.30.
Atmos Energy’s performance has been bolstered by strong results from its non-regulated segment, Atmos Pipeline - Texas (APT), and progress in rate cases. The company’s strong fundamentals are reflected in its 10.6% revenue growth and healthy gross profit margin of 58.2%. Additionally, growth prospects in Texas have contributed to the positive outlook. The company has capitalized on cloud computing technology in its Gas Reliability Infrastructure Program (GRC), marking a pioneering move in Texas that could potentially influence other jurisdictions.
In regulatory developments, the Texas rate case has authorized a $3.5 billion regulatory asset tracker for System Safety and Integrity Rider (SSIR) related expenditures after June 2024. Moreover, a consolidated rate case in Mid-Texas, impacting 15% of Mid-Tex customers, has been filed with a decision expected by June 10. APT’s 2024 rate filings, which seek an increase of $77.2 million, are also anticipated to reach a conclusion by the same date.
The analyst’s statement underscores the significance of these factors in the decision to raise the price target for Atmos Energy. The company’s strategic initiatives and regulatory advancements are key drivers of this revised financial expectation.
In other recent news, Atmos Energy Corporation reported impressive financial results for the first quarter of 2025, with earnings per share (EPS) of $5.26, significantly surpassing the forecast of $2.88. The company’s revenue reached $1.95 billion, exceeding expectations by $320 million. Atmos Energy also raised its fiscal 2025 EPS guidance to a range of $7.20 to $7.30. The company experienced strong customer growth, particularly in Texas, adding nearly 59,000 new customers. Operating income rose by 14.6% to $1.1 billion, supported by rate increases totaling $185 million. Atmos Energy plans to invest approximately $3.7 billion in capital spending, with operating and maintenance expenses projected between $860 million and $880 million. The company continues to focus on safety and reliability, with ongoing infrastructure projects aimed at enhancing system capacity and meeting growing demand. These developments reflect Atmos Energy’s strategic growth and strong market presence.
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