Ladenburg cuts Portland General stock rating to neutral

Published 18/02/2025, 13:22
Ladenburg cuts Portland General stock rating to neutral

On Tuesday, Portland General Electric Company (NYSE:POR), currently trading at $41.64 and near its 52-week low, experienced a shift in its stock rating, as Ladenburg Thalmann analysts downgraded the utility from Buy to Neutral. The downgrade was prompted by concerns regarding the impact of equity financing on the company’s earnings per share (EPS) growth. According to InvestingPro, the company trades at a P/E ratio of 13.8x and offers a 4.8% dividend yield.

Analysts at Ladenburg Thalmann, led by Paul Fremont, highlighted the company’s plan to issue $300 million in equity annually. This move aims to maintain a 50% equity-to-total capitalization ratio, aligning with the authorized capital structure in Oregon. InvestingPro data shows the company operates with a debt-to-equity ratio of 1.27, supporting the need for balanced financing. The analysts noted that this strategy is likely to slow EPS growth in the near term, despite the company’s impressive 17.7% revenue growth over the last twelve months.

Portland General Electric has indicated that it will fund new projects through a balanced mix of equity and debt, adhering to a 50/50 financing approach. Despite this, the analysts anticipate that the company’s EPS growth will fall short of its long-term target range of 5%-7%.

The company’s commitment to a substantial equity guidance of $300 million each year is part of its effort to achieve a healthy balance sheet. Nevertheless, the immediate consequence of this financial strategy is a projected deceleration in the rate of EPS expansion.

Portland General Electric’s stock rating adjustment reflects the analysts’ perspective on the potential challenges the company faces in sustaining its desired growth trajectory amidst its current financing plans. As the market reacts to this new information, investors will be closely monitoring the utility’s performance and future financial strategies. For a comprehensive analysis of POR’s valuation and growth prospects, investors can access the detailed Research Report available on InvestingPro, which covers over 1,400 US stocks with expert insights and actionable intelligence.

In other recent news, Portland General Electric reported a solid performance for 2024 with an optimistic forecast for 2025. The utility company revealed its 2024 adjusted earnings to be $3.14 per share, a significant increase from $2.38 per share in 2023. Additionally, revenue climbed to $3.44 billion, up from $2.92 billion the previous year.

Portland General Electric also initiated its 2025 earnings guidance, projecting adjusted earnings between $3.13 and $3.33 per share, with the midpoint surpassing the analyst consensus of $3.22. The company’s strong performance in 2024 was attributed to growth from new and returning customers, significant investments in clean energy resources, and robust safety performance.

Furthermore, the company invested $1.26 billion in capital projects in 2024, including grid modernization and renewable energy integration. Looking forward, Portland General Electric expects energy deliveries to increase 2.5% to 3.5% in 2025 and plans to invest $1.27 billion in capital expenditures as part of its ongoing commitment to the clean energy transition. These recent developments highlight the company’s robust performance and growth initiatives.

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