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On Monday, Jefferies updated its outlook on Xcel Energy (NASDAQ:XEL), increasing the price target to $81 from the previous $75, while keeping a Buy rating on the stock. Currently trading at $67.89 with a P/E ratio of 19.87, the $39.01B market cap utility shows mixed signals according to InvestingPro analysis. The revision comes after an additional $8.5 billion in capital expenditures was factored into the firm’s forecasts, suggesting that Xcel Energy could surpass an 8% compound annual growth rate (CAGR) for earnings per share (EPS) over the next five years, with potential for further growth.
The analyst at Jefferies highlighted Xcel Energy’s status as a large-cap utility company that offers both defensive qualities and growth potential. With a remarkable 54-year track record of consistent dividend payments and an average analyst consensus rating of 1.82 (Buy), the stock demonstrates strong defensive characteristics. The firm anticipates that the stock will undergo a re-rating, potentially reaching premium levels, as a result of successful wildfire litigation within the next year. This optimism is based on improved projections for both EPS and rate base CAGR, now estimated at 8.5% and 11.5%, respectively, compared to the previous 8.1% and 9.4%.
The positive stance on Xcel Energy also considers the company’s strong balance sheet and a regulatory environment that the analyst views as constructive. With a comprehensive update expected in the fall, Jefferies has raised its estimates and reiterated its Buy recommendation for the stock.
The market will likely monitor Xcel Energy’s progress closely, especially regarding the outcome of the wildfire litigation and the anticipated update later this year. The company’s ability to meet or exceed the revised growth expectations will be crucial for investors considering the stock’s future performance.
In other recent news, Xcel Energy has reported several notable developments. The company announced a dividend increase from 54.75 cents to 57 cents per share, marking a 4.1% rise and continuing its two-decade streak of annual dividend growth. Additionally, Xcel Energy issued $1.1 billion in senior notes, with proceeds likely supporting capital expenditures and refinancing existing debt. Public Service Company of Colorado, a subsidiary of Xcel Energy, also issued $1 billion in mortgage bonds as part of its strategy to manage capital structure and fund operations.
In terms of analyst activity, UBS raised Xcel Energy’s stock price target to $77 while maintaining a Neutral rating. The analyst highlighted potential growth in earnings per share and a dividend yield, despite some liabilities related to wildfire exposure. Furthermore, Xcel Energy announced executive changes ahead of COO Timothy O’Connor’s retirement, with Scott Sharp (OTC:SHCAY) and Michael Lamb assuming new roles as Executive Vice Presidents. These leadership transitions are part of the company’s succession planning and strategic oversight efforts.
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