Hawaiian Electric price target lowered to $11 from $11.25 at Jefferies

Investing.com - Jefferies lowered its price target on Hawaiian Electric (NYSE:HE) stock to $11.00 from $11.25 on Friday, while maintaining its Hold rating on the utility company. With a current market capitalization of $1.81 billion and trading at $10.53, the stock has shown resilience with a 16.87% return over the past year.

The firm cited Hawaiian Electric’s transformation into a pure-play utility, which removes diversification overhang, while noting that pending wildfire legislation will result in caps on future liability exposure for the company.

Jefferies highlighted that corporate integration should drive operational efficiencies for Hawaiian Electric as it focuses on its core utility business.

The research firm pointed out that Hawaiian Electric currently trades at a 41% discount to peers despite legislative progress, suggesting patient investors may find asymmetric upside potential as credit metrics normalize.

Despite these potential long-term benefits, Jefferies maintained its Hold rating, noting that while the company’s financial situation could improve, "it will take time" for these positive developments to fully materialize.

In other recent news, Hawaiian Electric Industries (HEI) and its subsidiary Hawaiian Electric Company (HECO) have seen significant developments that may interest investors. Both Fitch Ratings and Moody’s have upgraded the credit ratings for HEI and HECO, reflecting improvements in their financial standings. Fitch upgraded HEI’s Long-term Issuer Default Rating (IDR) to ’B+’ and HECO’s to ’BB-’, with a positive outlook, while Moody’s raised HEI’s corporate family rating to Ba3 and HECO’s issuer rating to Ba2. These upgrades follow the progress made in resolving litigation related to the 2023 Maui wildfire, with a settlement agreement expected to receive court approval in early 2026.

The Hawaii legislature’s passage of SB 897 and HB 1001 is crucial, as these bills aim to establish a liability cap for wildfire claims and secure funding for the settlement. Hawaiian Electric has prepared for its financial obligations by setting aside $479 million for the first settlement payment. Analysts from Evercore ISI and Jefferies have also weighed in, with Evercore maintaining an Outperform rating and Jefferies raising the price target to $11.25, citing legislative developments as a positive influence on the company’s financial outlook.

Hawaiian Electric has taken steps to strengthen its liquidity, including the sale of a 90.1% stake in American Savings Bank and a $558 million equity issuance. The company’s efforts in wildfire mitigation and the creation of a public safety power shutoff program have also been noted. Despite some uncertainties regarding the Public Utilities Commission’s recommendations on wildfire liability limitations, the overall sentiment from credit agencies and analysts suggests a cautiously optimistic outlook for Hawaiian Electric.

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