Fannie Mae, Freddie Mac shares tumble after conservatorship comments
On Monday, Mizuho (NYSE:MFG) Securities sustained its optimistic outlook on Xcel Energy (NASDAQ:XEL), a $39.8 billion utility company, with analyst Paul Fremont lifting the stock’s price target from $70.00 to $74.00, while keeping an Outperform rating on the shares. According to InvestingPro data, analyst targets for XEL range from $62.10 to $83.00, with a strong consensus recommendation of 1.82 (Buy). The revision follows Xcel Energy’s first-quarter earnings report, which revealed earnings per share (EPS) of $0.84, falling short of the consensus estimate of $0.92. The analyst attributed the earnings miss to timing issues related to the recovery of fuel and purchased power costs, which are expected to be recouped later in the year, approximately adding $0.10 to the EPS. InvestingPro analysis reveals that 5 analysts have recently revised their earnings expectations upward for the upcoming period, suggesting confidence in the company’s ability to recover.
Xcel Energy’s shares concluded trading at the lower end of the market spectrum. Factors contributing to the stock’s underperformance included the earnings shortfall, heightened concerns over transferability, and an escalation in the minimum expected liabilities from the Smokehouse Creek Fire.
Despite the quarterly earnings miss, Mizuho’s analysis projects that Xcel Energy will achieve results in the upper half of its 6-8% EPS compound annual growth rate (CAGR). The company has demonstrated remarkable stability, maintaining dividend payments for 54 consecutive years. Currently, Xcel Energy’s stock trades at roughly a 2.5% price-to-earnings (P/E) discount compared to the market, with InvestingPro showing a current P/E ratio of 20.29x. Get access to 12 more exclusive InvestingPro Tips and comprehensive financial analysis in the Pro Research Report, available with an InvestingPro subscription. Fremont suggests that the stock has the potential to re-rate to a mid-single-digit P/E premium.
The updated price target of $74 is based on current market multiples, reflecting Mizuho’s confidence in Xcel Energy’s ability to deliver strong financial performance and potentially exceed market expectations. The firm anticipates that the recovery of earlier costs and the company’s growth trajectory will contribute positively to the stock’s valuation. According to InvestingPro’s Fair Value analysis, the stock appears to be trading near its fair value, with an overall Financial Health score of "FAIR" based on comprehensive metrics including profitability, growth, and cash flow indicators.
In other recent news, Xcel Energy reported its first-quarter 2025 earnings, with earnings per share (EPS) of $0.84, which fell short of the forecasted $0.93. The company’s revenue also missed expectations, coming in at $3.91 billion compared to the anticipated $3.93 billion. Despite these shortfalls, Xcel Energy reaffirmed its full-year 2025 earnings guidance of $3.75 to $3.85 per share. Mizuho Securities maintained its Outperform rating on Xcel Energy and raised the stock’s price target to $74, even though the company missed its earnings estimates. Mizuho analysts expect the company to achieve results in the upper half of its 6-8% EPS compound annual growth rate forecast. Evercore ISI also maintained an Outperform rating on Xcel Energy, increasing the price target to $77 from $74, accounting for potential wildfire liabilities. The firm provided a scenario-based valuation that considers various potential wildfire loss outcomes. These developments highlight the ongoing challenges and opportunities for Xcel Energy, particularly in managing risks associated with wildfire liabilities and the timing of cost recoveries.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.