Jefferies maintains OGE Energy underperform rating, $52 target

On Friday, Jefferies analyst Julien Dumoulin-Smith maintained an Underperform rating and a $52.00 price target on OGE Energy (NYSE: NYSE:OGE), a utility company with a market capitalization of $8.9 billion and a beta of 0.61, indicating lower volatility than the broader market. The commentary from the analyst highlights management’s intention to own new generation capacities, with a pre-approved Request for Proposal (RFP) aligned with the 2025 Draft Integrated Resource Plan (IRP). The analyst noted a significant shift in the company’s rate case strategy and the impact of new legislation.

OGE Energy, described as a small to mid-size (SMID) utility company, is experiencing substantial load growth, which is further amplified by data centers that drive new generation needs and investments to cater to this demand. With impressive revenue growth of 15.6% and a steady dividend yield of 3.81%, supported by a remarkable 55-year streak of dividend payments, the company has demonstrated consistent shareholder returns. Dumoulin-Smith pointed out that due to OGE’s size in relation to the large load opportunities, the company presents a compelling investment opportunity in the space of regulated data centers.

The analyst’s reiteration of the Underperform rating suggests a cautious stance on the company’s stock performance potential, despite acknowledging OGE’s unique market position and growth prospects. The price target of $52.00 remains unchanged, indicating the analyst’s assessment of the stock’s valuation. According to InvestingPro analysis, the stock appears overvalued at current levels, though it trades at an attractive PEG ratio of 0.83, suggesting reasonable pricing relative to its growth rate. For deeper insights into OGE’s valuation and more exclusive financial metrics, check out the comprehensive Pro Research Report, available with an InvestingPro subscription.

OGE Energy’s strategy involves a proactive approach to meeting the increasing energy requirements, particularly from the data center sector, which necessitates significant investment in new generation capabilities. This strategy, combined with the regulatory environment, shapes the company’s business outlook.

Investors and market observers will likely monitor OGE Energy’s progress in implementing its strategic initiatives, such as the RFP pre-approval process and the adaptations to its rate case strategy, as outlined in the 2025 Draft IRP. The company’s ability to capitalize on the burgeoning demand from data centers will be crucial to its future growth and market positioning.

In other recent news, OGE Energy Corp reported strong financial results for the first quarter of 2025, with earnings per share (EPS) of $0.31, surpassing the consensus estimate of $0.23. The company’s net income rose significantly to $63 million, up from $19 million in the same quarter last year, driven by higher operating revenues and strong load growth. OGE Energy reaffirmed its full-year EPS guidance of $2.27, with a range of $2.21 to $2.33, indicating stable financial expectations. At the company’s annual meeting, shareholders elected ten directors and ratified Ernst & Young LLP as the principal independent accountants for 2025. The board also declared a third-quarter dividend of $0.42125 per share, consistent with the previous quarter. Mizuho (NYSE:MFG) Securities raised its price target for OGE Energy to $45 while maintaining a Neutral rating, reflecting the company’s positive earnings results but noting the stock’s current valuation premium. The company is also engaged in ongoing discussions with major data center projects, including Google (NASDAQ:GOOGL), highlighting future growth prospects. Despite Moody’s recent downgrade of OGE Energy’s balance sheet outlook, the company continues to focus on regulatory filings and partnerships that may impact its financial trajectory.

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