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On Thursday, KeyBanc Capital Markets maintained a Sector Weight rating on Northwestern Corp. (NASDAQ:NWE), a $3.4 billion market cap utility company trading near its 52-week high of $57.49, following the company’s recent settlement in a natural gas rate case. According to InvestingPro data, the company’s revenue growth stands at 6.45% over the last twelve months. The settlement, which was reached with several intervenors, will result in an $18 million revenue increase for Northwestern Corp.
The agreement is seen as a positive development for the energy company, which currently operates with a debt-to-equity ratio of 1.09. KeyBanc analyst Sophie Karp noted that while the settlement is a favorable step, the firm’s focus remains on the upcoming electric rate case. The electric rate case is deemed more contentious, especially concerning the recovery of costs from the Yellowstone County Generating Station and associated power expenses.
KeyBanc’s outlook suggests that the electric rate case could continue to pose challenges for Northwestern Corp. in the short term. The financial institution’s decision to maintain a Sector Weight rating indicates a neutral stance, implying that the stock is expected to perform in line with the average returns of the sector.
The analyst highlighted the importance of the electric rate case’s outcome for Northwestern Corp., indicating that it could have a significant impact on the company’s financial performance. The ongoing proceedings related to the electric rate case are anticipated to influence the company’s stock performance in the near future.
In conclusion, while the natural gas rate case settlement is a positive development for Northwestern Corp., KeyBanc Capital Markets advises caution due to the pending electric rate case. The firm’s maintained Sector Weight rating reflects a watchful approach as the market awaits the resolution of the electric proceedings. Notably, the company has maintained dividend payments for 21 consecutive years, with a current yield of 4.76%. InvestingPro analysis indicates the stock is currently trading slightly above its Fair Value, with additional insights available in the comprehensive Pro Research Report.
In other recent news, Northwestern Corp. has attracted attention with several key developments. The company’s fourth-quarter earnings call revealed a projected long-term earnings per share growth rate of 4-6%, starting from a base of $3.40 for fiscal year 2024. This projection, however, did not meet market expectations, leading Barclays (LON:BARC) analyst Nicholas Campanella to revise the stock’s price target from $57.00 to $56.00, although maintaining an Overweight rating. Despite the adjustment, Barclays remains optimistic about Northwestern’s potential to exceed growth rate expectations by 2027 and beyond, citing the company’s long capacity position and expanding load backdrop as positive factors.
In contrast, Ladenburg Thalmann upgraded Northwestern’s stock from Neutral to Buy, setting a price target of $57.50. This upgrade followed Northwestern’s announcement of agreements to supply power to two new data centers, which are expected to commence operations in 2026 and 2027. The first data center, operated by Atlas (NYSE:ATCO) Power Group in Butte, Montana, is projected to have an initial energy load of 75 megawatts in 2026, with potential growth in subsequent years. Additionally, Northwestern signed a letter of intent to supply 50 megawatts of power in 2027 to an unnamed data center developer, with expansion plans up to 250 megawatts by 2029. These agreements are seen as significant growth opportunities, enhancing Northwestern’s revenue prospects and influencing Ladenburg Thalmann’s positive outlook on the company’s stock.
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