Edison stock price target cut to $69 from $93 at Jefferies

On Wednesday, Jefferies analyst Julian Dumoulin-Smith adjusted the price target for Edison International (NYSE:EIX) stock, reducing it significantly to $69 from the previous figure of $93. Despite the reduction, the firm maintained a Buy rating on the utility company’s shares, which currently trade at $51.72 with a market capitalization of $20 billion. According to InvestingPro data, the company maintains a significant 6.4% dividend yield and has consistently paid dividends for 22 consecutive years. This move comes as a response to the recent California wildfires and the growing likelihood that Edison’s equipment was implicated in the Eaton (NYSE:ETN) Fire.

The analysis by Jefferies revises the wildfire risk assumptions for both Edison International and PG&E Corp (NYSE:PCG), factoring in the potential involvement of Edison’s equipment in the fire. The firm’s base case presumes that Edison International was not negligent and is eligible for protection under the Assembly Bill 1054 (AB 1054) Wildfire Fund. However, even with the incorporation of more severe scenarios for both companies, Jefferies sees enduring value, particularly for PG&E Corp.

The focus of investor debate concerning Edison International has shifted towards the probability of negligence or "conscious or willful disregard of the rights and safety of others." Evidence presented by The New York Times (NYSE:NYT) and attorneys representing plaintiffs has raised concerns regarding a decommissioned transmission tower’s possible role in sparking the Eaton Fire.

In addition to the revised price target for Edison International, Jefferies also lowered the price target for PG&E Corp to $20 from $25. These updated targets reflect the heightened wildfire risks and the associated financial implications for the utility firms involved. The reassessment of these risks is a direct consequence of the latest developments and evidence surrounding the recent wildfires in California.

In other recent news, Edison International and its subsidiary Southern California Edison Co. (SCE) have had their credit rating outlook revised to negative from stable by S&P Global Ratings due to potential risk for the California wildfire fund’s depletion. This change comes in the wake of the Eaton wildfire event, which resulted in significant damage and fatalities. The possibility that SCE’s equipment may be linked to the fire has raised concerns about the depletion of the wildfire fund and its impact on Edison and SCE’s credit quality.

In analyst updates, Evercore ISI maintained an Outperform rating on Edison, with a $77.00 price target, following a preliminary review of the company’s infrastructure related to the recent fire. On the other hand, Barclays (LON:BARC) reduced its price target for Edison to $67.00 from $76.00, while still maintaining an Overweight rating on the company’s stock.

These are recent developments following the Eaton wildfire event and the ongoing investigations into SCE’s potential involvement. The company is actively cooperating with authorities and will continue to provide updates as more information becomes available.

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