Sempra Energy stock rating initiated at Buy by BTIG on Texas growth

Investing.com - BTIG initiated coverage on Sempra Energy (NYSE:SRE) with a Buy rating and a price target of $106.00 on Wednesday. According to InvestingPro data, the stock has shown strong momentum with a 28.26% return over the past six months, trading near its 52-week high of $95.77.

The research firm cited Sempra’s strategic diversification and the strong position of its core utility, Oncor, which operates in one of the country’s highest load-growth regions in Texas.

BTIG noted that Sempra plans to fund much of its growth through sell-downs of its infrastructure segment, supporting the company’s repositioning strategy.

The firm expects Sempra to achieve earnings growth while potentially commanding higher valuation multiples as a result of this strategic shift.

Sempra Energy has been working to reposition itself with an increased focus on the Texas market, which BTIG described as "building even more opportunity" for the utility company.

In other recent news, Sempra Energy has made significant strides with its financial strategies and analyst evaluations. The company announced a major transaction involving the sale of a 45% stake in Sempra Infrastructure Partners to KKR for $10 billion, reflecting a 13.8x EV/EBITDA forward multiple. This move was positively received by BMO Capital, which raised its price target for Sempra Energy to $95 from $88, while maintaining an Outperform rating. Additionally, Barclays upgraded Sempra Energy to Overweight, citing the company’s shift towards focused U.S. utility growth and a target of 95% utility earnings contribution by 2027.

Evercore ISI also initiated coverage with an Outperform rating, highlighting a favorable outlook on Sempra’s share performance, particularly with its investments in Sempra Texas. Meanwhile, UBS maintained its Neutral rating and $82 price target, viewing the stake sale as a positive step in reducing funding risks for Oncor’s capital expenditure projects. These recent developments reflect a growing confidence among analysts in Sempra Energy’s strategic direction and financial stability.

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