Sempra Energy stock price target raised by BMO Capital to $95 from $88

Investing.com - BMO Capital raised its price target on Sempra Energy (NYSE:SRE) to $95.00 from $88.00 on Thursday, maintaining an Outperform rating on the stock. The utility company, currently trading at $87.28 with a market capitalization of $57 billion, is currently fairly valued according to InvestingPro analysis.

The price target increase follows Sempra’s announcement of a purchase and sale agreement to divest a 45% stake in Sempra Infrastructure Partners (SIP) to KKR for $10 billion, which implies a 13.8x EV/EBITDA forward multiple. The company’s current EV/EBITDA stands at 15.4x, while maintaining a strong dividend track record with 28 consecutive years of payments. InvestingPro subscribers can access 8 more key insights about Sempra’s financial health and growth prospects.

The transaction will result in a change of control to KKR, enabling the credit-positive de-consolidation of SIP debt, with the valuation likely reflecting a control premium, according to BMO Capital.

Sales proceeds from the transaction, expected to close in the second or third quarter of 2026, will be distributed across multiple years: $4.65 billion in 2026, $4.14 billion in 2027, and $1.2 billion in 2033.

Sempra Energy also announced the final investment decision for Port Arthur LNG Phase 2, with commercial operations for the third and fourth trains scheduled to begin in 2030 and 2031, respectively.

In other recent news, Sempra Energy announced the sale of a 45% stake in Sempra Infrastructure Partners to KKR and CPP for $10 billion, or $11.6 billion including interest income. This transaction is valued at a 13.8x EV/EBITDA multiple, surpassing the 13.4x multiple from a previous sale in 2021. Following this announcement, Mizuho raised its price target for Sempra Energy to $93, maintaining an Outperform rating. Wolfe Research also adjusted its price target upward to $95, citing Sempra’s strong utility franchises in California and Texas.

UBS reiterated a Neutral rating for Sempra Energy, keeping its price target at $82, and highlighted the asset sale as a positive step in reducing funding risks. In legislative developments, California enacted Senate Bill 254, introducing the Wildfire Fund Continuation Account, which provides up to $18 billion in additional liquidity for wildfire-related claims. Sempra and its subsidiary, San Diego Gas & Electric Company, expressed their intention to participate in this new fund. These developments reflect strategic shifts and regulatory changes impacting Sempra Energy’s operations and financial outlook.

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