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Investing.com - Mizuho downgraded Pinnacle West Capital (NYSE:PNW) stock rating to Neutral from Outperform on Tuesday, while lowering its price target to $90.00 from $102.00. The utility company, currently trading at a P/E ratio of 17.8x and commanding a market cap of $10.5 billion, has maintained a strong dividend track record with 13 consecutive years of increases.
The downgrade comes despite Pinnacle West’s approximately 5% load growth supported by large manufacturing facilities and data centers, as Mizuho’s updated forecast model indicates regulatory lag will diminish most of the expected accretion until 2028/29. According to InvestingPro data, the company has achieved 7.47% revenue growth in the last twelve months, though it operates with a significant debt burden.
Mizuho previously anticipated minimal regulatory lag and under-earning by 2027, but revised projections now push this improvement to 2028/29, suggesting continued pressure on the utility company’s earnings.
The firm expects Pinnacle West shares to face additional pressure as investors look toward 2026, with Mizuho projecting 2026 guidance around $4.55 per share compared to the current consensus of $4.88.
Pinnacle West stock has underperformed year-to-date, declining 2% compared to the average for regulated utilities, with Mizuho’s revised 2027 estimate of $5.47 representing the lowest on Wall Street. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading above its intrinsic value, while offering a 4.1% dividend yield.
In other recent news, Pinnacle West Capital reported its Q2 2025 earnings, showing mixed results. The company posted earnings per share of $1.58, which slightly missed the analysts’ forecast of $1.60. However, revenue reached $1.36 billion, slightly surpassing expectations. Despite a modest year-over-year decline in EPS by approximately 10%, these results were in line with management’s expectations. BMO Capital raised its price target for Pinnacle West Capital to $98 from $96 while maintaining a Market Perform rating. These developments reflect a cautious investor sentiment amidst broader market growth. Analysts at BMO Capital noted that the earnings results were consistent with management’s outlook.
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