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Investing.com - BMO Capital raised its price target on Sempra Energy (NYSE:SRE) to $95.00 from $88.00 on Thursday, while maintaining an Outperform rating on the stock. The utility company, currently valued at $57 billion, has shown strong momentum with a 27% gain over the past six months. According to InvestingPro analysis, the stock appears slightly overvalued at current levels.
The price target increase follows Sempra’s announcement of a deal to sell a 45% stake in Sempra Infrastructure Partners (SIP) to KKR for $10 billion, which implies a 13.8x EV/EBITDA forward multiple.
The transaction will result in a change of control to KKR, allowing for the credit-positive de-consolidation of SIP debt, with the sale proceeds scheduled to be distributed across 2026, 2027, and 2033 in amounts of $4.65 billion, $4.14 billion, and $1.2 billion respectively.
BMO Capital noted that the valuation likely reflects a control premium, with the deal expected to close in the second or third quarter of 2026.
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.
In other recent news, Sempra Energy announced a major transaction involving the sale of a 45% stake in Sempra Infrastructure Partners to KKR and CPP for $10 billion, with the valuation reaching $11.6 billion when including interest income. This sale was conducted at a 13.8x EV/EBITDA multiple, a figure surpassing the 13.4x multiple from a similar transaction in 2021. The move has prompted several analysts to adjust their price targets for Sempra Energy. BMO Capital increased its price target to $95, maintaining an Outperform rating, while Mizuho raised its target to $93, also with an Outperform rating. Wolfe Research followed suit, upping its target to $95, citing the company’s strong utility franchises in California and Texas. UBS maintained a Neutral rating with a price target of $82, viewing the asset sale as a positive step in reducing funding risks. Additionally, Sempra and its subsidiary, San Diego Gas & Electric, announced the enactment of California’s new wildfire legislation, which establishes a fund providing up to $18 billion in additional liquidity for wildfire-related claims. This development is significant for large California electric investor-owned utilities, including SDG&E, which intends to participate in the fund.
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