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On Tuesday, UBS analyst William Appicelli updated the price target on Xcel Energy (NASDAQ:XEL) stock, raising it from $73.00 to $77.00, while maintaining a Neutral rating on the shares. Appicelli highlighted Xcel Energy, a $40.27 billion market cap utility company, as a potential investment opportunity. With a current stock price of $70.47, the company offers an anticipated 8% growth in earnings per share (EPS) and a 3.22% dividend yield. Notably, InvestingPro data reveals the company has maintained dividend payments for an impressive 54 consecutive years, demonstrating strong commitment to shareholder returns. The stock’s low beta of 0.39 suggests lower volatility compared to the broader market.
Appicelli noted that Xcel Energy is currently trading at a 5% discount based on the projected $4.46 EPS for the year 2027. This valuation accounts for an estimated $4.4 billion gross liability, which the analyst associates with both past and potential future wildfire exposure. According to InvestingPro analysis, the stock currently trades at a P/E ratio of 20.59x, which is considered high relative to its near-term earnings growth potential. Despite these concerns, Appicelli identified several positive factors that could drive the stock’s performance. These include the potential resolution of liabilities from the Marshall fire within a manageable range of $1.5 billion to $2.0 billion and an anticipated increase in capital expenditure plans set to be reported in the third quarter of 2025 alongside the company’s results.
On the other hand, Appicelli cautioned that there are risks, particularly the possibility of a trial related to the Marshall fire that includes a significant personal liability component. Such an outcome could adversely affect the company’s earnings outlook and valuation assumptions. Nevertheless, the raised price target to $77 reflects a 10% upside potential from the previous target. For a deeper understanding of Xcel Energy’s financial health and growth prospects, investors can access comprehensive analysis and additional ProTips through InvestingPro’s detailed research report, which is part of their coverage of over 1,400 US stocks.
The UBS analyst’s base case assumes that insurance will cover the economic damages from the Marshall fire, leading to no negative impact on Xcel Energy’s EPS. The company’s ability to navigate these challenges and capitalize on the identified catalysts will be crucial for its stock performance going forward.
In other recent news, Xcel Energy Inc. has announced several significant developments that investors should note. The company reported the issuance of $1.1 billion in senior notes, with proceeds likely earmarked for capital expenditures and debt refinancing. Additionally, Public Service Company of Colorado, a subsidiary of Xcel Energy, issued $1 billion in mortgage bonds to manage its capital structure and support ongoing operations. These financial moves are part of Xcel Energy’s broader strategy to secure favorable financing conditions.
Xcel Energy also announced an increase in its dividend to 57 cents per share, marking a 4.1% rise and continuing its two-decade streak of annual dividend growth. This decision reflects the company’s confidence in its long-term growth strategy and financial stability. In executive news, Xcel Energy is preparing for the retirement of its Chief Operations Officer, Timothy O’Connor, with internal appointments to ensure a smooth transition.
Furthermore, the Minnesota Public Utilities Commission approved Xcel Energy’s comprehensive resource plan, which includes significant expansions in renewable energy and storage capacity. The plan outlines the addition of substantial wind, solar, and storage resources by 2030, as well as life extensions for nuclear and other plants. These strategic initiatives highlight Xcel Energy’s commitment to enhancing its energy infrastructure and sustainability efforts.
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