On Thursday, Ladenburg Thalmann analyst Paul Fremont upgraded Evergy (NASDAQ:EVRG)'s stock, listed on NASDAQ:EVRG, from Neutral to Buy, setting a price target of $68.50. Fremont's decision is based on an anticipated increase in the company's rate base growth. Since beginning coverage in April 2024, Fremont has noted a rise in customer demand growth projections, now ranging between 2%-3%, up from an initial 2%. Concurrently, the rate base growth forecast has been lifted to 8% from the previous 6%.
The optimistic outlook for Evergy is partly due to the company's recent strategic moves, including significant capital expenditure on new infrastructure. Fremont highlighted that Evergy's increased investments are in response to recent developments, such as the construction of two new gas-fired combined cycle gas turbine (CCGT) plants with a combined capacity of 1,410 megawatts, and the addition of 324 megawatts of new solar generation capacity.
These expansions are a direct response to the growing demand from AI and data centers, which have been a significant factor in driving up the company's potential load. Evergy has identified the possibility of accommodating up to 6,000 megawatts of additional load, primarily fueled by these sectors.
The upgrade reflects a positive shift in Evergy's growth trajectory, as Fremont's analysis suggests that the company is well-positioned to capitalize on the increasing energy requirements of high-tech industries. Evergy's focus on expanding its capacity and infrastructure indicates a strategic effort to meet the anticipated demand surge from AI and data center clients.
Fremont's comments underscore the potential for Evergy's enhanced capital expenditure to translate into tangible growth for the company's rate base.
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