NiSource stock rises after UBS reiterates Buy rating on data center contract

Investing.com - NiSource Inc. (NYSE:NI) stock, currently trading at $41.21 with a market cap of $19.4 billion, is gaining attention after UBS reiterated its Buy rating and $45.00 price target following the company’s disclosure of a new data center contract. According to InvestingPro data, the stock has received positive analyst revisions, though it appears overvalued based on Fair Value analysis.

On September 18, NIPSCO, a NiSource subsidiary, entered into a contract with a large investment-grade data center customer, according to an 8-K filing released Monday. The contract will be submitted to the Indiana Utility Regulatory Commission for approval and includes a mechanism to flow savings back to customers.

The capacity commitment is expected to begin in 2027 with a ramp to full load by 2032, though specific details about the contract remain limited. NiSource is expected to provide more information during its third-quarter update call in the coming weeks.

UBS analyst Ross Fowler estimates the contract could add approximately $0.03 to earnings per share by 2027, based on projections from NiSource’s Integrated Resource Plan that anticipated 200MW of data center load by that year, though the firm acknowledges this figure might be outdated.

The contract includes provisions to return savings to retail customers for any system use beginning in 2027, which UBS notes is an important element given recent concerns around utility rates and affordability in Indiana.

In other recent news, NiSource Inc. has announced several significant developments. The company declared a quarterly dividend of $0.28 per share, payable on November 20, 2025, to stockholders of record as of October 31, 2025. NiSource’s subsidiary, Northern Indiana Public Service Company LLC (NIPSCO), signed an agreement to supply power to data centers, with a capacity commitment beginning in 2027 and increasing annually through 2032. This contract will be submitted to the Indiana Utility Regulatory Commission for approval.

Amidst these developments, NiSource’s stock rating was downgraded by Jefferies from Buy to Hold due to regulatory uncertainties in Indiana. The regulatory changes in the state, including the exit of two utility commissioners, might also delay the company’s plan to spin off its Genco subsidiary, according to Citigroup analyst Ryan Levine. Despite these challenges, Wolfe Research raised its price target for NiSource to $46.00, maintaining an Outperform rating and highlighting the company’s strong rate base and earnings growth projections.

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