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On Monday, Stifel analysts increased their price target on Northwest Natural Gas (NYSE:NWN) shares, moving it up to $45.00 from the previous $44.00, while reiterating a Buy rating for the company. Currently trading at $42.07, the stock has shown strong momentum with a 16.85% return over the past year. The adjustment follows Northwest Natural Gas’s fourth-quarter 2024 results, which matched Stifel’s forecasts after accounting for one-off items. According to InvestingPro analysis, the company appears overvalued at current levels, with a P/E ratio of 20.61.
Stifel’s update to their model for Northwest Natural Gas comes in anticipation of a significant earnings increase for the company in 2025. Northwest Natural Gas has projected an 18% rise in earnings per share (EPS) for 2025 compared to the previous year, with InvestingPro data showing current EPS at $2.03. This growth is primarily attributed to the acquisition of SiEnergy, a move that is also expected to double the company’s annual customer growth rate to a range of 2.0 to 2.5%. Notably, the company has maintained an impressive track record of raising dividends for 54 consecutive years, currently offering a 4.67% yield.
Moreover, starting in the first quarter of 2025, Northwest Natural Gas plans to report its water business and SiEnergy as separate entities, a move that Stifel believes has been eagerly awaited by the market. The company’s Oregon rate case is also set to come into effect in late 2025, which is predicted to provide a further boost going into 2026. With an EBITDA of $358.6 million and a market cap of $1.7 billion, investors seeking deeper insights into Northwest Natural Gas’s financial health and growth prospects can access comprehensive analysis through InvestingPro’s detailed research reports, which cover over 1,400 US stocks.
Stifel’s analyst provided a statement on the revised model and expectations, saying, "We are updating our NWN model, following 4Q24 results in line with our estimates, when adjusted for one-time items. Northwest expects 2025 EPS to increase approximately 18% over 2024, largely driven by the SiEnergy acquisition. Anticipated annual customer growth has doubled to 2.0 to 2.5%, also driven by SiEnergy. Additionally, beginning in 1Q25 NWN will breakout out its water business and SiEnergy, which we believe is much anticipated. Lastly, NWN’s Oregon rate case should take effect in late 2025, providing an uplift into 2026. At this time, we are maintaining our Buy rating and raising our target price to $45.00, from $44.00 previously."
In other recent news, Northwest Natural Holdings reported its fourth-quarter 2024 earnings, showing mixed results. The company met analysts’ expectations with earnings per share (EPS) of $1.41, but revenue fell short, totaling $370.87 million against the forecasted $395.07 million. Despite this revenue miss, the company completed the largest Oregon gas utility rate case in its history, which could impact future financial performance. Additionally, Northwest Natural Holdings finalized the acquisition of Sea Energy in Texas, which is expected to be a significant growth driver. The company has set its 2025 EPS guidance between $2.75 and $2.95, with capital expenditures projected to be between $450 million and $500 million. Analysts from Seaberg Williams Shank and Stifel have engaged with the company regarding its strategic opportunities and capital investment plans. The company continues to focus on long-term growth, with significant contributions anticipated from its recent acquisitions and operational expansions.
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