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On Friday, Jefferies analyst Julien Dumoulin-Smith increased the price target on Pinnacle West Capital (NYSE:PNW) to $111.00, up from $110.00, while reaffirming a Buy rating on the company’s shares. The stock, currently trading at $95.21 and near its 52-week high of $96.50, has delivered an impressive 36% return over the past year. Dumoulin-Smith’s optimism is based on recent announcements of economic development by companies such as TSMC and the Mayo Clinic, which are expected to contribute significantly to Pinnacle West’s long-term growth. According to InvestingPro analysis, the stock is currently trading slightly above its Fair Value.
The analyst highlighted TSMC’s investment plans, which could inject more than $100 billion into the economy, potentially translating into a demand for over 500 megawatts (MW) of power over time. This increased demand is anticipated to start making an impact with hundreds of incremental MWs by 2030.
Jefferies maintains a positive outlook for Pinnacle West, projecting a 9.9% compound annual growth rate (CAGR) in earnings per share (EPS) from 2025 to 2029. This forecast surpasses the consensus estimate of an 8.4% EPS CAGR. The new price target implies a total shareholder return (TSR) of approximately 19.5%.
Pinnacle West Capital, through its subsidiary Arizona Public Service, provides electric service to the state of Arizona. The anticipated economic growth in the region, spurred by significant investments from TSMC and other entities, is expected to bolster the demand for electricity, thereby benefiting Pinnacle West.
The analyst’s expectations are built on the premise that these developments will drive Pinnacle West’s earnings and contribute to the utility company’s value proposition for investors. The slight increase in the price target reflects confidence in the company’s prospects and its ability to capitalize on the economic expansion in its service territories.
In other recent news, Pinnacle West Capital Corporation reported a better-than-expected performance for the fourth quarter of 2024. The company posted a loss of $0.06 per share, surpassing the anticipated loss of $0.17 per share. Revenue reached $1.1 billion, exceeding forecasts of $1.02 billion. This strong financial performance was driven by robust sales growth and a favorable rate case outcome, with full-year earnings per share reaching $5.24, an increase of $0.83 from the previous year.
Additionally, BofA Securities has adjusted its price target for Pinnacle West Capital, raising it from $90 to $99, while maintaining a Buy rating. This revision reflects confidence in the company’s growth opportunities and an improving regulatory environment. BofA’s analysis aligns closely with consensus estimates for the company’s earnings per share from 2025 through 2027. The firm’s positive outlook suggests a potential upside for investors.
Pinnacle West reaffirmed its long-term EPS growth guidance of 5% to 7% and expects weather-normalized sales growth of 4% to 6% in 2025. The company plans to file a rate case by mid-2025, with potential implementation by the end of 2026. These developments indicate a continued focus on growth and regulatory advancements.
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