Gold prices slip slightly after recent gains; U.S. data eyed
On Monday, UBS analyst Gregg Orrill upgraded Portland General Electric Company (NYSE:POR) stock from Neutral to Buy, raising the price target to $50.00 from $47.00. Currently trading at $41.76, near its 52-week low of $40.05, the stock has attracted attention from analysts, with six recently revising their earnings estimates upward according to InvestingPro. The upgrade reflects a positive outlook despite concerns over renewable procurement costs associated with tariffs.
Orrill addressed the devaluation of the stock due to these concerns, noting that it was trading at a significant 30% discount compared to the Utility group average P/E ratio. The stock currently trades at 14.54x earnings and offers a notable 5.03% dividend yield, having maintained dividend payments for 20 consecutive years as reported by InvestingPro. At 11.8 times the projected 2027 earnings, Orrill suggests that the market has overestimated the company’s exposure to potential tariff disallowances. The current price is believed to factor in a procurement scenario of 525 megawatts, with a $1.1 billion exposure to tariff disallowances.
However, UBS anticipates that Portland General Electric will diversify its supplier base and find ways to offset the tariffs, potentially reducing the exposure to $200-$300 million. Despite including a 4% discount in their valuation for conservatism, UBS expects the company to be able to recover these costs, which would amount to an 8% increase to customers, through ratebase inclusion.
Orrill concluded by projecting that as the company’s strategies for mitigating tariff costs become clearer, the stock’s valuation discount should narrow. UBS forecasts a re-rating from the current 30% discount to around 15%, which would imply a 14 times multiple of the projected $3.54 earnings per share in 2027, or a $50.00 price target.
In other recent news, Portland General Electric (PGE) reported its first-quarter 2025 earnings, surpassing expectations with an earnings per share (EPS) of $1.21, compared to the forecasted $1.14. However, the company’s revenue fell short of projections, totaling $928 million against an expected $976.05 million. The company reaffirmed its 2025 adjusted earnings guidance, maintaining a range of $3.13 to $3.33 per diluted share. PGE experienced a significant 16.4% increase in industrial load growth, contributing to a total load growth of 4.6%. Despite the mixed earnings report, the company is focused on upcoming projects, including a battery storage initiative aimed at enhancing energy delivery. Additionally, PGE plans to spend over $120 million on wildfire mitigation in 2025, working with various stakeholders to address the societal risks of wildfires. The company is also considering updates to its corporate structure, potentially transitioning to a holding company to increase financial flexibility. These developments reflect PGE’s ongoing efforts to manage operational challenges while pursuing strategic growth initiatives.
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