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Thursday, Hawaiian Electric shares (NYSE:HE) maintained their Outperform rating with a steady price target of $14.00, as affirmed by Evercore ISI. Currently trading at $10.76, the stock sits between analyst targets ranging from $10 to $14. According to InvestingPro analysis, the company’s financial health score is rated as "FAIR." The endorsement comes in light of recent legal developments involving the company’s settlement agreements related to a wildfire lawsuit.
Yesterday, Judge Peter Cahill of the Maui 2nd Circuit Court approved a motion for good faith in the individual plaintiff wildfire settlement agreement involving Hawaiian Electric. This decision marks a significant step towards the final resolution of the litigation, with the court’s final approval anticipated late this year or early next year.
In conjunction with the individual plaintiff settlement, the court also granted preliminary approval for the class settlement agreement. This initiates the notice process, allowing for a period during which affected individuals can sign the settlement agreements and releases. This process is expected to span several months, with the court’s final approval of the class settlement projected for late 2025 or early 2026.
Following the eventual final approval of both the individual and class settlement agreements, Hawaiian Electric will be obligated to initiate its first settlement payment within 30 days. The company has prepared for this financial commitment by allocating $479 million into a special purpose entity designated for this payment. InvestingPro data shows the company maintains a healthy current ratio of 1.25, with liquid assets exceeding short-term obligations, suggesting adequate financial flexibility for settlement obligations.
The court’s decisions represent critical milestones in the resolution of the wildfire litigation, setting the stage for Hawaiian Electric to move forward with its settlement obligations and providing clarity on the timeline for the associated financial transactions. While currently unprofitable, InvestingPro analysts project a return to profitability this year, with an EPS forecast of $0.74 for 2025. Discover more insights and 12+ additional ProTips with an InvestingPro subscription.
In other recent news, Hawaiian Electric reported its first-quarter 2025 earnings, with earnings per share (EPS) of $0.23, slightly surpassing the forecast of $0.2277. This performance indicates stable financial management despite ongoing challenges from the 2023 Maui wildfires. The company’s net income reached $26.7 million, and utility core net income improved to $49.7 million from $44.2 million in the same quarter the previous year. Evercore ISI maintained its Outperform rating with a $14.00 price target for Hawaiian Electric, noting the company’s efforts to enhance financial stability, including a wildfire settlement nearing finalization and strategic divestitures. Jefferies analyst Julian Dumoulin-Smith raised Hawaiian Electric’s price target to $11.25 while maintaining a Hold rating, citing legislative developments in Hawaii that could positively impact the company’s financial outlook. Legislative measures, such as the passage of bills addressing wildfire liabilities, are expected to provide Hawaiian Electric with a more stable regulatory environment. The company has also taken steps to improve liquidity, such as establishing new financial mechanisms and receiving legislative approval for securitization to fund future wildfire mitigation investments. Despite these developments, uncertainties remain regarding the Public Utilities Commission’s decisions on wildfire liability limits and insurance fund recommendations.
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