UBS maintains Buy on Edison stock with $70 target

Tuesday, Edison International (NYSE:EIX) received a reaffirmation of a Buy rating and a $70.00 price target from UBS, as the firm looks favorably on recent legislative developments in California. According to InvestingPro data, the stock currently trades near its 52-week low of $48.38, while maintaining a notable 6.7% dividend yield with a 22-year track record of consistent payments. UBS analyst Gregg Orrill highlighted the passage of a bill through the California Senate on June 4, which could allow utilities to utilize securitization for the recovery of significant investments in wildfire mitigation and energization projects. The bill, known as SB 254, is gaining traction and has until September 12 to be finalized.

Orrill pointed out that among the investor-owned utilities in California, Pacific Gas & Electric Company (PCG) has the largest wildfire mitigation spending, while Edison International has the highest electric vehicle (EV) penetration within its service area. The analyst noted that all California investor-owned utilities are involved in energization investment. According to UBS, Edison International’s stock appears to be the most undervalued, trading at 8.1 times their 2027 earnings per share (EPS) estimate of $6.10. InvestingPro analysis confirms this undervaluation, with the stock currently trading at a P/E ratio of just 7.11x. Discover more insights about EIX’s valuation and access comprehensive analysis in the Pro Research Report, available exclusively to InvestingPro subscribers.

The analyst’s commentary also touched on the potential impact of the proposed legislation on other utilities. For Pacific Gas & Electric Company, the use of $5 billion in securitization for wildfire investment could equate to 6% of its 2027 ratebase guidance. The utility’s stock is currently trading at 8.3 times UBS’s estimated 2027 EPS of $1.76, compared to the utility average of 16.2 times.

Sempra Energy (NYSE:SRE), another utility company, was mentioned as being the least exposed to California policy volatility due to its diverse business mix. UBS’s position remains that Edison International is a Buy, as the current legislative environment could positively influence the company’s financial outlook and investment recovery efforts. This outlook is supported by InvestingPro data showing four analysts recently revising their earnings estimates upward, despite the company’s significant debt burden. For deeper insights into EIX’s financial health and growth prospects, including exclusive ProTips and comprehensive metrics, explore the full Pro Research Report available on InvestingPro.

In other recent news, Edison International reported its Q1 2025 earnings, revealing an earnings per share (EPS) of $1.37, which fell short of the analysts’ forecast of $1.41. The company’s revenue also missed expectations, coming in at $3.81 billion against a projected $4.4 billion. This performance contrasts with previous quarters where Edison often met or exceeded expectations, suggesting potential challenges in achieving revenue targets. Meanwhile, UBS maintained a Buy rating on Edison International, setting a price target of $65, highlighting the company’s advancements in wildfire mitigation efforts. Evercore ISI also raised its price target for Edison International to $61 from $56, maintaining an Outperform rating, and emphasizing the company’s proactive stance on wildfire legislation in California. Fitch Ratings placed Edison International and Southern California Edison on Rating Watch Negative due to ongoing wildfire risks and potential liabilities related to the Eaton (NYSE:ETN) Fire. The California Public Utilities Commission has approved Southern California Edison’s settlement of claims related to past wildfires, allowing recovery of about $1.6 billion of the $2.7 billion initially requested. These developments indicate significant financial and regulatory challenges for Edison International as it navigates wildfire liabilities and legislative changes.

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