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Investing.com - Jefferies raised its price target on Pinnacle West Capital (NYSE:PNW) to $110.00 from $109.00 on Wednesday, while maintaining a Buy rating on the utility company’s stock. The $10.7 billion utility company, which currently trades at a P/E ratio of 17.7x, appears overvalued according to InvestingPro’s Fair Value model.
The investment firm cited Pinnacle West’s "compelling regulated utility growth story" which is supported by strong economic expansion in Arizona. Jefferies projects 10.7% rate base growth through 2029, significantly higher than the Street consensus of 7.0%. The company’s recent revenue growth of 10.7% and consistent dividend payments for 33 consecutive years, with a current yield of 3.99%, support this growth narrative.
Jefferies also forecasts a 7.5% earnings per share compound annual growth rate for the company, compared to the 6.2% consensus estimate from other analysts.
The firm highlighted several near-term catalysts for Pinnacle West, including the potential to exceed its December capacity request for proposal of 2 gigawatts.
Jefferies noted that despite these positive factors creating "a unique setup where a premium valuation is warranted," Pinnacle West shares currently trade only in line with industry peers.
In other recent news, Pinnacle West Capital Corporation has declared a quarterly dividend of $0.895 per share, payable on September 2, 2025, to shareholders of record as of August 1, 2025. The company has also filed its 2025 general rate case with the Arizona Corporation Commission, seeking a $580 million revenue increase and a 10.7% return on equity, with KeyBanc maintaining an Overweight rating on the stock due to an improved regulatory outlook. Mizuho (NYSE:MFG) has adjusted its price target for Pinnacle West from $104.00 to $102.00 while keeping an Outperform rating, citing expectations that the rate case will undergo a full litigation process. Jefferies has also revised its price target to $109.00 from $111.00, reiterating a Buy rating and emphasizing long-term growth prospects. Pinnacle West shareholders recently voted on several key proposals at the Annual Meeting, including director elections and executive compensation, with all major proposals passing. The company is also planning to implement formula rates by 2027, as noted by Jefferies, which could impact its financial structure. Additionally, the Arizona Superior Court rejected a challenge to the company’s formula-based rates, further influencing the regulatory landscape. These developments come as Pinnacle West continues to focus on strategic growth and regulatory adjustments.
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