UBS raises Sempra Energy stock price target to $82 on Oncor growth

Investing.com - UBS raised its price target on Sempra Energy (NYSE:SRE) to $82.00 from $78.00 on Wednesday, while maintaining a Neutral rating on the energy infrastructure company. Currently trading at $75.07, the stock sits approximately 21% below its 52-week high of $95.77, with InvestingPro data showing the company maintains a FAIR overall financial health score.

The research firm cited strong growth at Sempra’s Oncor utility as a positive factor supporting the higher valuation target. Oncor, Sempra’s Texas-based electric transmission and distribution business, has demonstrated robust performance that contributed to the price target adjustment.

Despite the price target increase, UBS maintained its Neutral stance on Sempra stock, pointing to several ongoing concerns. The firm specifically highlighted uncertainty surrounding California wildfire risks that the company needs to address.

UBS also expressed reservations about what it described as "opaqueness" in Sempra’s infrastructure business segment. The pending Oncor rate case was mentioned as an additional, though lesser, concern influencing the neutral position.

"We continue to remain on the sidelines as we would like to see execution from management on hitting numbers," UBS noted in its analysis, suggesting that improved operational performance would be necessary to warrant a more positive outlook on the stock.

In other recent news, Sempra Energy reported its Q1 2025 earnings, with an adjusted earnings per share (EPS) of $1.44, surpassing analysts’ expectations of $1.35. However, the company’s revenue of $3.8 billion fell short of the anticipated $3.87 billion. Sempra Energy reaffirmed its full-year 2025 EPS guidance of $4.30 to $4.70 and projected a long-term EPS compound annual growth rate of 7-9% from 2025 through 2029. Additionally, Sempra announced that Texas House Bill 5247, which introduces a "unified tracker mechanism" for electric utilities, was signed into law. This mechanism is expected to enhance Oncor Electric Delivery Company LLC’s earnings, a subsidiary in which Sempra holds an 80.25% interest. Oncor plans to make its first filing under this new mechanism in 2026. In analyst updates, Jefferies raised the price target for Sempra Energy to $78 while maintaining a Hold rating, citing the importance of the Strategic Infrastructure Partners sale in restoring management confidence. BMO Capital Markets also increased its price target to $81, maintaining an Outperform rating, following Sempra’s strong Q1 2025 EPS results.

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