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On Tuesday, Scotiabank (TSX:BNS) analyst Andrew Weisel increased the price target for FirstEnergy Corp. (NYSE:FE) shares to $46.00, up from the previous $44.00, while retaining a Sector Outperform rating. According to InvestingPro data, FirstEnergy, currently valued at $24.4 billion by market cap, appears slightly undervalued based on Fair Value analysis. Weisel acknowledged the company’s substantial strides since the February update, highlighting robust earnings, steady regulatory progress, and positive legislative changes in Ohio.
FirstEnergy’s move towards multi-year plans, expected by May or June, is anticipated to enhance long-term transparency and predictability. With a strong financial health score rated as GOOD by InvestingPro and a consistent 28-year track record of dividend payments, currently yielding 4.21%, the company demonstrates reliable shareholder returns. This shift could potentially lead to a partial settlement in the ongoing rate case, with discussions described as productive and constructive. Management’s confidence in achieving 6%-8% long-term earnings per share (EPS) growth was noted, especially the expectation to hit the upper half of that range in 2025 and to continue this growth trajectory into 2026.
Weisel also pointed out the company’s minimal exposure to tariffs, which is less than 0.2% of its capital expenditure plan. While operating with a significant debt burden, FirstEnergy has maintained solid revenue growth of 8.03% over the last twelve months. Additionally, FirstEnergy’s trailing twelve-month earned return on equity (ROE) has improved to 9.8%, aligning with its target range of 9.5%-10%. The analyst conveyed a sense of relief and impression with these developments.Discover more insights about FirstEnergy and access comprehensive Pro Research Reports covering 1,400+ top US stocks through InvestingPro.
The upgrade in FirstEnergy’s price target is partly attributed to the reduction of the perceived risk profile, leading to a smaller discount to the sector anchor price-to-earnings (P/E) ratio. Currently trading at a P/E of 22.58x, the new target reflects a 2% discount to the sector anchor P/E of 16.0x applied to the fiscal year three (2027) EPS, compared to the previous 5% discount.
FirstEnergy’s first quarter of 2025 earnings per share of $0.67 surpassed both Scotiabank’s and consensus estimates, which stood at $0.66 and $0.61, respectively. This performance contributes to the optimistic outlook for near-term outperformance, despite the recognition that it may take time and effort to fully overcome the approximate 10% P/E discount that the company currently faces.
In other recent news, FirstEnergy Corporation reported impressive first-quarter results for 2025, with earnings and revenue exceeding analyst expectations. The company posted an earnings per share (EPS) of $0.67, surpassing the forecast of $0.58, while revenue reached $3.8 billion, outpacing the anticipated $3.44 billion. FirstEnergy also reaffirmed its 2025 core EPS guidance, aiming for the top half of the $2.40-$2.60 range, and outlined a strategic capital investment plan of $28 billion through 2029. The company experienced a notable 10% increase in high-margin residential demand, contributing to its robust performance. Additionally, FirstEnergy is focusing on data center opportunities and transmission investments, aligning with its long-term growth strategy. FirstEnergy’s ongoing settlement discussions in Ohio, as well as legislative strategies, remain key areas of focus. The company has also been actively managing its operating expenses and cash flow, showing significant improvement from the previous year.
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