Bullish indicating open at $55-$60, IPO prices at $37
On Friday, Jefferies analyst Julian Dumoulin-Smith updated the firm’s outlook on Sempra Energy (NYSE: NYSE:SRE), raising the price target to $78.00 from the previous $75.00. The analyst retained a Hold rating on the stock. The adjustment reflects a growing investor interest despite the company’s recent downward guidance revision. According to InvestingPro data, the stock currently trades at $77.95, with analyst targets ranging from $70 to $89. The company’s Fair Value analysis suggests it’s slightly overvalued at current levels.
Dumoulin-Smith noted that for Sempra Energy to regain management confidence, a successful outcome from the Strategic Infrastructure Partners (SIP) sale is crucial. Expectations are now set for the sale to bring in approximately $5 billion, which is significantly higher than the initial guidance of over $1 billion. Jefferies estimates a $5.1 billion valuation for a 30% stake in the SIP sale. With a market capitalization of $50.84 billion and total revenue of $13.35 billion in the last twelve months, this sale would represent a significant transaction for the company. InvestingPro subscribers can access detailed financial health scores and additional insights about Sempra’s capital structure and growth potential.
The analyst also mentioned that the current macroeconomic environment adds a layer of complexity to Sempra Energy’s outlook. Specific concerns include the impact of tariffs and the uncertain role of Liquefied Natural Gas (OTC:LNGLF) (LNG) in trade at the moment. These factors contribute to the decision to maintain a Hold rating on the stock until there is clear evidence that management can deliver positive results once again.
Sempra Energy’s stock price target increase comes at a time when the energy sector is navigating through a period of uncertainty, with macroeconomic factors influencing trade and investment decisions. The company’s ability to surpass its original guidance in the SIP sale will be a key factor in restoring confidence among investors and analysts alike.
The hold rating suggests that while there may be potential in Sempra Energy’s stock, Jefferies is awaiting further proof of the company’s ability to execute its strategy effectively in light of the current challenges it faces.
In other recent news, Sempra Energy reported its first-quarter 2025 earnings, revealing an adjusted earnings per share (EPS) of $1.44, which surpassed analysts’ expectations of $1.35. However, the company’s revenue of $3.8 billion fell short of the anticipated $3.87 billion. Despite the revenue miss, Sempra Energy reaffirmed its full-year 2025 EPS guidance of $4.30 to $4.70 and projected a compound annual growth rate of 7-9% from 2025 through 2029. BMO Capital Markets responded by increasing its price target for Sempra Energy to $81 from $78, maintaining an Outperform rating. This adjustment follows Sempra’s strong earnings performance and strategic plans, including significant investments in infrastructure and technology. The company plans to invest $13 billion in infrastructure, with over $10 billion targeted for U.S. utilities. Key projects, such as the Cimarron Wind and ECA LNG Phase One, are expected to enhance future earnings. Sempra Energy’s management emphasized their focus on execution and the potential benefits from asset recycling and capital expenditure opportunities at Oncor, a subsidiary.
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