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Investing.com - UBS has reiterated a Buy rating on Edison International (NYSE:EIX) with a price target of $68.00, according to a research note released Tuesday. The stock, currently trading at $49.77, near its 52-week low of $47.73, offers a compelling 6.55% dividend yield. According to InvestingPro analysis, the stock appears undervalued at current levels.
The investment firm cited the absence of a California general rate case decision as the primary driver of lower second-quarter 2025 earnings per share expectations. UBS forecasts second-quarter EPS of $0.86, significantly below the consensus estimate of $1.47. Trading at a P/E ratio of 7x, the stock presents an attractive valuation compared to industry peers. InvestingPro subscribers can access detailed valuation metrics and 8 additional key insights about Edison International.
Despite the projected quarterly shortfall, UBS maintained its full-year 2025 EPS forecast of $6.00 for the utility company. The firm explained this decision by noting that Edison International will record the impact of the rate case decision retroactively to January 1, 2025.
UBS expects a proposed decision in the California rate case to come in the third quarter of 2025. The firm anticipates a final decision will be reached before the end of the year.
The rate case outcome remains a key catalyst for Edison International’s financial performance in 2025, with the retroactive application potentially offsetting the weaker second-quarter results once approved.
In other recent news, Edison International announced a quarterly dividend of $0.8275 per share, payable on July 31, 2025, to shareholders of record as of July 7, 2025. The company is navigating a challenging regulatory environment in California, with a proposed bill potentially affecting utility regulations and financing, impacting both Edison International and PG&E Corporation. UBS has maintained a Buy rating for Edison International, citing potential benefits from the legislative developments, including securitization for wildfire mitigation investments. UBS set a price target of $70, noting Edison International’s undervaluation relative to its earnings projections for 2027.
Additionally, Edison International and Southern California Edison are on Fitch Ratings’ Negative Watch due to the high wildfire risk and potential liabilities from the Eaton (NYSE:ETN) Fire. The ongoing investigation into the fire could lead to credit rating downgrades if Southern California Edison equipment is found responsible. Meanwhile, the California Public Utilities Commission has approved settlements for past wildfire claims, allowing Southern California Edison to recover a portion of the costs. Fitch anticipates that Edison International’s and Southern California Edison’s credit metrics will improve from 2025 to 2028, contingent on regulatory outcomes and wildfire liability recoveries. Investors are closely monitoring these developments as they could significantly impact the company’s financial health and stock valuation.
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