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On Monday, Guggenheim analyst Shahriar Pourreza increased the price target on PG&E Corporation (NYSE:PCG) to $17.00, up from the previous target of $16.00, while maintaining a Neutral rating on the stock. The adjustment followed PG&E’s first-quarter earnings for 2025, which were reported to be in line with consensus estimates. Pourreza also noted that the company reaffirmed its earnings per share (EPS) guidance for the year and its long-term financial plan.
PG&E’s first quarter of 2025 was described as another period of quiet execution as the company progresses towards its next rate case cycle and the cost of capital cycle in California. The company’s filing for cost of capital was considered modest by the analyst, who also mentioned that management has not disclosed the specifics of what is included in the current financial assumptions, apart from a conservative level.
Additionally, the analyst highlighted the company’s management’s focus on shifting the narrative towards customer value. PG&E has reiterated its intention to avoid any double-digit revenue increase requests while aiming to support industry-leading rate base growth. The report suggested that this strategy could eventually set PG&E apart, but also noted that outcomes depend on litigation and the California Public Utilities Commission’s (CPUC) decisions, which have been inconsistent on several items in 2024.
The analyst also touched on the potential reinforcement of the AB1054 construct within the 2025 timeframe. However, there is currently no clear insight into specific ideas being considered or a definitive timeline, which historically has extended into August with last-minute changes.
In summary, while Guggenheim sees potential for PG&E to transition into a simple, sustainable, and high-growth utility story, the firm acknowledges that there are still several hurdles to overcome. These include investment grade (IG) status, AB1054, and regulatory clarity, with the timeline for potential catalysts appearing to be protracted. The updated price target reflects these considerations while reiterating a neutral stance on the stock.
In other recent news, PG&E Corporation reported its first-quarter 2025 financial results, which showed a slight miss in earnings expectations. The company posted an earnings per share (EPS) of $0.33, falling short of the anticipated $0.34, while revenue also came in below expectations at $5.98 billion compared to the forecasted $6.02 billion. Despite these results, PG&E reaffirmed its full-year EPS guidance of $1.48 to $1.52, indicating confidence in its financial trajectory. Mizuho (NYSE:MFG) Securities adjusted its price target for PG&E, reducing it from $23.00 to $20.00, but maintained its Outperform rating on the company’s shares. The firm cited the value seen in PG&E’s shares, which have been trading at a discount compared to peers. PG&E plans a substantial $63 billion capital investment through 2028, focusing on operational efficiency and infrastructure improvements. The company also highlighted ongoing attention on legislative developments around AB 1054, concerning wildfire costs and liabilities. PG&E’s stock has been influenced by these regulatory proceedings, which are beyond its direct control.
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