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Investing.com - Mizuho downgraded Eversource Energy (NYSE:ES) from Outperform to Neutral on Thursday, while reducing its price target to $68.00 from $81.00, citing ongoing concerns with Connecticut regulation. The stock plunged 12.45% to $65.26 following the news, marking a steep 11.44% one-week decline according to InvestingPro data.
The downgrade follows the Connecticut Public Utilities Regulatory Authority’s (PURA) unanimous Tuesday vote rejecting Eversource’s request to sell its Aquarion water utility business, which was expected to improve the company’s credit metrics by approximately 100 basis points.
Mizuho expressed concern that the regulatory decision brings into question Eversource’s anticipated Connecticut Light & Power (CL&P) rate filing in the second quarter of 2026, which would seek a 25-30% rate increase during a gubernatorial election.
The rejection also likely pushes out $980 million of Connecticut storm cost recovery to 2027 or later, further complicating the company’s financial outlook.
Eversource has been on a Baa2 negative outlook at Moody’s since January 2024, and despite the stock now trading at a 26% P/E discount following Wednesday’s selloff, Mizuho sees limited upside potential due to the Connecticut regulatory challenges. According to InvestingPro analysis, the stock appears slightly overvalued at current levels, though it maintains a respectable 4.61% dividend yield with a 27-year history of consistent dividend payments. Analyst price targets range from $60 to $87, reflecting the mixed outlook. Get access to Eversource’s comprehensive Pro Research Report and 10+ additional ProTips with an InvestingPro subscription.
In other recent news, Eversource Energy reported its third-quarter earnings, with earnings per share of $1.19, surpassing the consensus estimate of $1.15. This performance prompted Scotiabank to raise its price target for Eversource Energy to $64, though the firm maintained its Sector Underperform rating. Additionally, Eversource Energy’s second-quarter results showed a slight increase in earnings per share, rising to $0.96 from $0.95 in the previous year. Despite these earnings results, Connecticut regulators rejected Eversource’s proposal to sell its Aquarion Water Company subsidiary, citing concerns over managerial responsibility and governance. The denial was unanimous by the Connecticut Public Utilities Regulatory Authority. Eversource Energy has reaffirmed its full-year earnings guidance, projecting an earnings per share range of $4.67 to $4.82. These developments reflect both operational achievements and regulatory challenges for the company.
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