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On Thursday, Jefferies analyst Julien Dumoulin-Smith updated the firm’s outlook on Consolidated Edison (NYSE:ED), a utility giant with a $35.6 billion market cap, increasing the price target to $113 from $108 while maintaining a Hold rating on the shares. According to InvestingPro data, the stock currently trades at a P/E ratio of 19.8x and offers a 3.3% dividend yield. The revision reflects a positive view on the company’s earnings potential in light of the ongoing rate case for Consolidated Edison Company of New York (CECONY).
In his assessment, Dumoulin-Smith noted that the mark-to-market return on equity (ROE) in the pending CECONY rate case compared to the current 9.25% could enable Consolidated Edison to hit the midpoint of its 6-7% earnings per share (EPS) growth guidance through 2029. This projection is more optimistic than the consensus, which stands at a 5.5% growth rate. Notably, InvestingPro highlights that the company has maintained dividend payments for 55 consecutive years and raised them for 50 straight years, demonstrating remarkable financial stability. The analyst’s outlook suggests a 6.2% compound annual growth rate (CAGR) for EPS through 2029, which takes into account lower capital expenditure (capex) assumptions that align with past regulatory decisions.
The analyst’s commentary highlighted the potential for Consolidated Edison to meet its growth targets, indicating a belief in the company’s ability to perform within its guidance range. However, the size of the rate case request was cited as a reason for caution, preventing a more bullish stance on the stock at this time.
The price target increase comes at a moment when defensive stocks like utilities are considered favorable due to their stability in uncertain market conditions. Consolidated Edison’s focus on delivering consistent growth amidst regulatory processes appears to underpin Jefferies’ updated price target.
The current rate case is a critical factor for Consolidated Edison’s financial outlook, as it will determine the allowed ROE for CECONY, a significant subsidiary of the utility. The outcome of this case will have implications for the company’s revenue and investment capacity moving forward. InvestingPro analysis indicates the company maintains a "GOOD" overall financial health score, though current valuations suggest the stock may be trading above its Fair Value. For deeper insights into ED’s valuation and 12+ additional ProTips, investors can access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Consolidated Edison reported fourth-quarter earnings that exceeded analyst expectations, with adjusted earnings per share of $0.98, surpassing the consensus of $0.95. The company also reported revenue of $3.67 billion, beating estimates of $3.59 billion and reflecting a 2.2% year-over-year increase. For the full year 2024, Con Edison achieved adjusted earnings of $5.40 per share, up from $5.07 in 2023. Looking forward, the company projects adjusted earnings per share for fiscal year 2025 in the range of $5.50 to $5.70, aligning closely with analyst expectations of $5.63. Additionally, Con Edison announced a substantial expansion of its five-year capital plan, adding $10 billion, which marks a 35% increase over previous figures. This expansion is part of the company’s strategy to support its projected growth and financial targets through 2029. In other developments, Evercore ISI raised its price target for Con Edison to $107.00 from $100.00, maintaining an In Line rating, reflecting a positive outlook on the company’s growth prospects. Furthermore, Con Edison entered into an underwriting agreement with Barclays (LON:BARC) Capital for the sale of 6.3 million common shares, as disclosed in a recent SEC filing.
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