UBS reiterates Buy rating on Edison International stock with $66 target

Investing.com - UBS maintained its Buy rating and $66.00 price target on Edison International (NYSE:EIX), currently trading at $55.58, following the completion of the utility’s rate case. According to InvestingPro data, the stock is currently trading below its Fair Value, with analysts setting targets ranging from $52.50 to $86.00.

The investment firm cited several positive catalysts for the stock, including the recent rate case completion, expected reaffirmation of earnings guidance, and the net positive passage of wildfire legislation this year.

Edison International received 91% of its requested rate base and 62% of requested revenue increases in the recently completed rate case, according to UBS.

The firm expects Edison to reaffirm its midpoint 6% EPS growth rate guidance (within a 5% to 7% range) in the coming weeks or during the third quarter earnings call.

UBS noted that Edison International currently trades at 9 times its $6.47 2027 EPS estimate and offers a 5.96% dividend yield, with an impressive 22-year streak of consecutive dividend payments. The stock is poised to benefit from the rate case outcome, wildfire legislation risk mitigation measures, and a Woolsey paid claims recovery settlement. InvestingPro subscribers have access to 8 additional key insights about Edison International’s financial health and growth prospects.

In other recent news, Edison International has been downgraded to ’BBB-’ from ’BBB’ by S&P Global Ratings, due to concerns over a shrinking wildfire fund. This downgrade comes despite California lawmakers reaching an agreement to boost the state’s wildfire utility fund by approximately $18 billion, which aims to stabilize the fund after recent wildfires. In related developments, UBS has adjusted its price target for Edison International to $66 from $68, though it maintains a Buy rating on the stock. This adjustment reflects changes in the Utility group average multiple. Meanwhile, Southern California Edison, a subsidiary of Edison International, announced plans to host workshops for its Wildfire Recovery Compensation Program, targeting those affected by the Eaton Fire. The program is voluntary and aims to provide direct payments and expedited resolutions. Additionally, UBS reiterated its Buy rating on Edison International with a $68 target, noting potential funding shortfalls in the company’s rate case. These developments highlight ongoing financial and operational challenges for Edison International amid California’s wildfire risks.

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