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Investing.com - Jefferies has lowered its price target on WEC Energy Group (NYSE:WEC) to $106.00 from $108.00 while maintaining a Hold rating on the stock. According to InvestingPro data, the utility company currently trades at a P/E ratio of 20.6x and offers a 3.36% dividend yield, having maintained dividend payments for 55 consecutive years.
The firm expects WEC Energy to report in-line second-quarter results and continues to focus on the company’s data center growth narrative and related investment opportunities.
Jefferies forecasts a 7.3% earnings per share compound annual growth rate (CAGR), ahead of the Street’s 7.0% estimate, noting that investors generally expect a 7.0-7.5% range with a potential 50 basis point increase to the company’s current 6.5-7.0% EPS CAGR guidance.
The firm believes WEC Energy faces manageable regulatory risk and has sufficient credit flexibility to execute its growth plans, with potential upside from the company’s upcoming Fall capital expenditure update.
WEC Energy Group currently trades at a 13% premium to peers, which Jefferies indicates already reflects expected data center contract wins and a robust core capital expenditure update expected this Fall, limiting further upside potential.
In other recent news, WEC Energy Group announced its decision to extend the operations of units 7 and 8 at the Oak Creek Power Plant until the end of 2026. This extension addresses the tightened energy supply requirements in the Midwest and aims to ensure reliable service during peak demand periods. Additionally, WEC Energy Group plans to offer $700 million in convertible senior notes due in 2028, with proceeds intended for general corporate purposes, including debt repayment. In a recent shareholder meeting, all proposed directors were elected, and amendments to eliminate supermajority voting requirements were approved. However, a stockholder proposal for a simple majority vote did not pass.
WEC Energy Group also announced changes to its executive team, with Michael Hooper appointed as Executive Vice President and Chief Operating Officer. Curt Culver’s departure from the Board of Directors was confirmed due to retirement age, with his unvested shares vesting immediately. On the analyst front, Scotiabank (TSX:BNS) raised its price target for WEC Energy Group to $115, maintaining a Sector Outperform rating. Analyst Andrew Weisel highlighted the company’s strong earnings performance, with first-quarter EPS of $2.27, surpassing estimates. The analyst also noted WEC Energy’s potential for earnings and dividend growth, as well as a possible increase in capital expenditure within six months.
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