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On Tuesday, Jefferies made an adjustment to the price target for Public Service Enterprise Group Inc. (NYSE:PEG), reducing it slightly from $84.00 to $83.00. The firm has chosen to maintain a Hold rating on the stock. The company, currently trading at $83.47, has demonstrated strong financial stability with a 54-year track record of consistent dividend payments.
The decision to lower the price target comes as Jefferies sees a less attractive risk/reward balance for PSEG compared to its peers in the integrated utility and power sector. According to Jefferies, PSEG’s current valuation already assumes a significant portion of its portfolio and a power price scenario that may be overly optimistic. Based on InvestingPro analysis, the stock appears overvalued at current levels, with a P/E ratio of 20.46 and an EV/EBITDA of 15.69.
Jefferies noted that PSEG’s valuation embeds approximately 90% of its portfolio and a power price scenario of around $95 per megawatt-hour at a 50% probability. This assumption is notably higher than what is factored into the valuation of PSEG’s peer, Constellation Energy Group (NASDAQ:CEG). InvestingPro subscribers can access detailed valuation metrics, comprehensive financial health scores, and expert analysis in the Pro Research Report, offering deeper insights into PSEG’s market position.
Furthermore, there appears to be some hesitation from PSEG regarding the deployment at a 3.5 gigawatt site in New Jersey, which is recognized as one of the largest in the world. The uncertainty surrounding the DeepSeek project is contributing to a less favorable view of the stock, prompting Jefferies to trim the price target by $1 per share.
The adjustment reflects Jefferies’ analysis of the potential risks and rewards associated with investing in PSEG stock at this time, taking into account the company’s portfolio and market conditions in the power industry.
In other recent news, Public Service Enterprise Group Incorporated announced amendments to its executive compensation plans, which aim to update the Key Executive Severance Plan and the Deferred Compensation Plan. The company also reported robust third-quarter earnings for 2024, slightly exceeding expectations at $0.90 per share. BMO Capital Markets adjusted its price target for the company to $87.00, maintaining a Market Perform rating. The company’s management refined its 2024 earnings forecast to a range of $3.64-3.68.
In addition, Public Service Enterprise Group Inc. resolved regulatory filings, including a rate case that will add $505 million in annual revenues. A $1.9 billion energy efficiency investment program was approved for 2025-2027. The company continues to pursue opportunities in nuclear energy.
PSEG Power, a division of the company, reported a Q3 net income of $0.28 per share. The company reaffirmed its commitment to a long-term earnings per share compound annual growth rate of 5-7% and projected capital investment for 2024 at $3.5 billion. These are among the recent developments for the company.
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