Street Calls of the Week
Investing.com - Morgan Stanley has upgraded PG&E Corporation (NYSE:PCG) from Underweight to Equalweight and raised its price target to $20.00 from $19.00.
The upgrade reflects Morgan Stanley’s increased comfort with PG&E’s investment case, citing a replenished fund and the stock’s current discount of approximately 50% to the sector’s price-to-earnings ratio.
The firm noted this represents a more favorable risk-reward profile compared to when it downgraded the stock in February 2025, when PG&E traded at a 500 basis points narrower discount and faced fire season with limited protection from the fund.
Despite the upgrade, Morgan Stanley stopped short of an Overweight rating, explaining that California still lacks a permanent solution for its significantly above-average wildfire risk.
The firm observed that utility investors typically apply meaningful discounts for tail risk scenarios, which it says are inconsistent with the financial stability expected for utility investments, as demonstrated by California utilities’ year-to-date performance.
In other recent news, PG&E Corporation reported financial results for the second quarter of 2025, which did not meet analysts’ expectations. The company announced earnings per share of $0.31, falling short of the projected $0.34. Additionally, revenue was reported at $5.9 billion, which was below the anticipated $6.26 billion. In legislative developments, California lawmakers have reached an initial agreement to bolster the state’s wildfire utility fund by approximately $18 billion. This plan is set to split the funding equally between ratepayers and utility shareholders. Meanwhile, UBS has maintained its Neutral rating and $19.00 price target on PG&E, following a decision by the California Public Utility Commission to increase the utility’s capital cost caps by $1.47 billion. UBS noted its views on pending wildfire legislation have evolved positively. These developments reflect ongoing changes in the regulatory and financial landscape for PG&E.
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