Is this U.S.-China selloff a buy? A top Wall Street voice weighs in
Investing.com - Jefferies upgraded MDU Resources (NYSE:MDU) from Hold to Buy on Friday, while raising its price target to $20.00 from $18.00 previously. According to InvestingPro data, MDU currently trades at $16.68, with analysts setting targets between $18 and $22.
The research firm cited MDU’s compelling value, noting the stock currently trades at an 11% discount to its core business value even after incorporating potential upside from the Bakken East Pipeline project at a 50% probability. The company maintains a solid financial profile with a "GOOD" overall health score on InvestingPro, supported by a P/E ratio of 18.3x and a healthy 3.48% dividend yield.
Jefferies highlighted MDU’s differentiated 6-8% EPS compound annual growth rate compared to other small and mid-cap growth stories in the sector.
The firm believes that post-spin noise that led to guidance revisions earlier this year is now behind the company, creating a clearer path forward.
According to Jefferies, an upcoming pipeline announcement represents a potential catalyst that could drive a re-rating opportunity for the stock.
In other recent news, MDU Resources Group reported its earnings for the second quarter of 2025, noting an earnings per share (EPS) of $0.07, which fell short of the forecasted $0.11. Despite the EPS miss, the company managed to surpass revenue expectations. However, increased operating costs and adverse weather conditions presented challenges during the quarter. Additionally, MDU Resources announced a 7.7% increase in its quarterly dividend, raising it to 14 cents per share, up from the previous 13 cents. This adjustment brings the annualized dividend payout to 56 cents per share. The company continues to aim for a long-term dividend payout ratio of 60% to 70% of earnings. In governance updates, MDU Resources has elected Charles M. Kelley and Tammy J. Miller to its board of directors, effective August 2025. Kelley brings extensive experience from the natural gas industry, having managed substantial capital projects in his previous role.
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