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On Friday, Jefferies analyst Julien Dumoulin-Smith adjusted the price target for Duke Energy (NYSE:DUK) shares, increasing it to $132.00 from $129.00. The firm continues to endorse a Buy rating for the utility company’s stock, which currently commands a market capitalization of $87.8 billion. According to InvestingPro data, Duke Energy maintains strong financial health with an overall score of "GOOD" and operates as a prominent player in the Electric Utilities industry. The revision in the price target comes as the analyst tweaks the earnings estimates for the years 2025 through 2029 slightly downward after Duke Energy announced a modest reduction in its guidance.
Dumoulin-Smith noted that despite the $0.03 (0.5%) reduction in the forecast, Duke Energy still projects a robust 6.8% earnings per share (EPS) compound annual growth rate (CAGR). The analyst highlighted the attractiveness of Duke Energy’s stock, citing its near-group multiple and solid growth proposition. The company’s P/E ratio stands at 19.8x, which InvestingPro analysis suggests is attractive relative to its near-term earnings growth potential. The company has demonstrated consistent revenue growth, with a 6.1% increase in the last twelve months. The endorsement of the Buy rating was reiterated based on these factors.
In addition to the price target adjustment, the analyst pointed out that Duke Energy’s management has updated its guidance language. The company now anticipates its EPS CAGR to be in the upper half of the 5-7% range, rather than at the top end as previously expected. This change reflects a more conservative but still positive outlook for the company’s earnings growth.
The report also includes expectations for Duke Energy’s rate base growth, which is projected to accelerate. The analyst anticipates a rate base CAGR of approximately 7.7% for the period from 2024 to 2029, compared to the earlier projection of around 7.2% for 2023 to 2028. This acceleration indicates potential for increased revenue growth stemming from the rate base, which is a critical factor for utility companies like Duke Energy.
Duke Energy’s stock price target increase by Jefferies signals confidence in the company’s growth trajectory and financial performance. The adjustment takes into account the latest guidance from the company and the expected rate base growth, which are key indicators of Duke Energy’s future profitability and overall financial health. Notably, the company has maintained dividend payments for 55 consecutive years and currently offers a dividend yield of 3.7%. For deeper insights into Duke Energy’s valuation and growth prospects, investors can access comprehensive analysis through the InvestingPro platform, which offers exclusive financial metrics and additional ProTips for informed decision-making.
In other recent news, Duke Energy reported its fourth-quarter 2024 earnings, with adjusted earnings per share (EPS) of $1.66, slightly missing the forecast of $1.68, and revenue coming in at $7.36 billion, which was below the expected $7.7 billion. Following this announcement, several financial institutions made adjustments to their price targets for Duke Energy. Goldman Sachs increased its price target to $122, citing promising growth prospects in the Carolinas despite maintaining a neutral stance. Mizuho (NYSE:MFG) Securities also raised its target to $122, maintaining an Outperform rating, and highlighted Duke Energy’s solid balance sheet and improved rate base growth forecast.
BMO Capital Markets, however, slightly decreased its price target from $124 to $123, while still holding an Outperform rating. The firm noted that operational and maintenance expenses and storm-related costs might pressure Duke Energy’s growth until demand rises significantly after 2027. Despite some challenges, Duke Energy management remains optimistic about long-term performance, projecting a 7% EPS growth for 2025 and planning significant investments in renewable energy and infrastructure. The company’s $83 billion capital plan aims to support this growth, focusing on expanding its renewable energy portfolio and infrastructure enhancements. These developments reflect a mixed but generally positive outlook from analysts and management, with an emphasis on future growth and strategic investments.
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