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On Tuesday, Evercore ISI analyst Durgesh Chopra upgraded Ameren Corp . (NYSE:AEE) stock from In Line to Outperform, also increasing the price target to $104 from the previous $89. The upgrade comes as the $25.1 billion utility trades near its 52-week high of $95.69, with InvestingPro data showing three analysts recently revising earnings estimates upward.
Chopra believes that Ameren has the potential to achieve the higher end of its targeted 6-8% earnings per share (EPS) growth rate. The analyst's EPS estimate for 2027 stands at $5.77, which is slightly above the street consensus by $0.12, or 2%.
Chopra pointed to several factors that could contribute to Ameren's growth towards the upper end of its target range. These include updates to the Minnesota Integrated Resource Plan (IRP), legislative changes in Minnesota, investment opportunities in the Midcontinent Independent (LON:IOG) System Operator (MISO) market, and the successful execution of rate cases.
Additionally, a multi-year rate decision in Illinois in December has provided visibility and certainty for investments through 2027. InvestingPro highlights Ameren's strong dividend profile, having raised dividends for 11 consecutive years and maintained payments for 27 years straight.
The analyst sees a compelling risk/reward profile for Ameren, with a base case total return of 14% driven by the $104 price target. Evercore ISI also presented a bull/bear case valuation, which suggests a potential 19% upside to $109 and an 8% downside to $84, respectively.
The firm's base case models approximately 8% EPS growth, which is a 12% premium to their target 16x multiple. This is attributed to Ameren's superior growth forecast compared to the industry average, a higher quality balance sheet as indicated by Moody's (NYSE:MCO) Baa1 rating, and the potential for EPS upside.
Looking ahead, Ameren's Q4 earnings release, scheduled for February 13, 2025, is anticipated to be a significant catalyst for the stock. The company has shown strong momentum with a 27.8% price return over the past six months. With the year-end results approaching, Ameren is projected to provide an update on its five-year capital and financing plan for the years 2025-2029. Evercore ISI anticipates a double-digit increase in capital spending, which is likely to reinforce investor confidence in Ameren's EPS growth trajectory.
For deeper insights into Ameren's financials and additional ProTips, investors can access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Ameren Corp. has seen significant developments. Mizuho (NYSE:MFG) Securities, Jefferies, and BMO Capital Markets have all adjusted their price targets for the company. Mizuho Securities raised its target to $95, citing potential benefits from new legislation in Missouri.
Jefferies increased its target to $100, expecting Ameren's strong performance to continue into 2025. Meanwhile, BMO Capital Markets initially downgraded its target to $93, but later upgraded it to $98, reflecting developments in a Missouri rate case and Ameren's quarterly earnings report.
Ameren's earnings per share (EPS) for the third quarter of 2024 was reported at $1.87, slightly below the anticipated range of $1.90 to $1.93. The company has refined its earnings guidance for 2024, projecting a range between $4.55 and $4.69. It also provided its 2025 earnings outlook earlier than usual, forecasting a range of $4.85 to $5.05, suggesting a year-over-year growth of 7.1%.
The company plans to issue $300 million of common equity in 2024 to support its capital investments. Ameren's 10-year investment pipeline exceeds $55 billion, aiming to bolster economic growth and job creation.
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