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Mizuho (NYSE:MFG) lowered its price target on Pinnacle West Capital (NYSE:PNW) stock to $102.00 from $104.00 on Tuesday, while maintaining an Outperform rating following the utility’s general rate case filing. The $10.62 billion market cap utility company, known for its low volatility with a beta of 0.43, currently trades at a P/E ratio of 17.43. According to InvestingPro analysis, the stock appears to be trading above its Fair Value.
Pinnacle West filed the rate case on Friday, marking its first request for a formula rate proposal designed to minimize regulatory lag. The company is seeking a 14% rate increase based on a 10.7% return on equity and 52.35% equity ratio, compared to current rates built on a 9.55% return on equity and the same equity ratio. The utility maintains a solid 4.03% dividend yield and has maintained dividend payments for 33 consecutive years, according to InvestingPro data.
Mizuho expects the Arizona Corporation Commission ( ACC (NSE:ACC)) will put the rate case through a full litigation process since this represents Pinnacle West’s first formula rate request following regulators’ 2024 policy statement. The firm continues to believe Arizona regulators will support the utility’s request for forward-looking rates.
The Arizona Superior Court rejected a challenge to formula-based rates from the Residential Utility Consumer Office (RUCO) last week, a separate development in the regulatory landscape affecting Pinnacle West.
Mizuho adjusted its price target based on current market multiples while maintaining its view that Pinnacle West will trade at a high single-digit premium multiple.
In other recent news, Pinnacle West Capital Corporation reported an unexpected loss for the first quarter of 2025, with earnings per share at -$0.04, missing the forecasted $0.02. Despite the earnings miss, the company exceeded revenue expectations, reporting $1.03 billion against a forecast of $988.95 million. At the company’s Annual Meeting of Shareholders, all eleven directors were elected for one-year terms, and the advisory vote on executive compensation passed with a significant majority. Additionally, an amendment to increase the number of authorized common stock was approved, while a shareholder proposal to improve special shareholder meetings was rejected.
Jefferies recently adjusted Pinnacle West’s stock price target to $109, down from $111, but maintained a Buy rating, citing long-term growth prospects. The company is expected to potentially surpass its current target of procuring 2,000 megawatts by 2028-2030, with results anticipated in late 2025. Pinnacle West is also exploring the implementation of formula rates by 2027, which could impact its financial structure and customer billing. These developments indicate a strategic shift as the company navigates the evolving energy landscape.
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