Exelon (EXC – Research Report), the Utilities sector company, was revisited by a Wall Street analyst today. Analyst Nicholas Campanella from Barclays remains neutral on the stock and has a $38.00 price target.
Nicholas Campanella has given his Buy rating due to a combination of factors affecting Exelon’s stock. Despite the recent negative rate order from the Illinois Commerce Commission that impacted Exelon’s subsidiary ComEd, Campanella sees the stock’s consequent underperformance and multiple sell-side downgrades as an overreaction. He acknowledges the need for earnings revisions and a compression in the price-to-earnings multiple but believes the current market price has excessively discounted the potential negative outcomes. His analysis suggests that the stock is relatively inexpensive, especially considering the future catalysts and opportunities for capital expenditure that have not been factored into his conservative estimates.
Furthermore, Campanella highlights Exelon’s diversified business model and its premium Federal Energy Regulatory Commission (FERC) transmission footprint, which could drive future growth. Despite the setbacks in Illinois, he anticipates regulatory developments in Pennsylvania and Illinois to act as positive catalysts for the stock. While earnings per share (EPS) forecasts have been reduced to reflect the more challenging regulatory environment, Campanella still projects a compound annual growth rate (CAGR) in line with the utility sector average, with Exelon trading at a P/E discount based on these projections. This valuation gap, alongside the company’s efforts to challenge the rate outcomes and explore new capital expenditure opportunities, supports the rationale behind the Buy rating.
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Exelon (EXC) Company Description:
Illinois-based Exelon Corp. is a utility company, which is engaged in power generation, competitive energy sales, transmission and delivery in the United States and Canada. The company operates through five business units including, ComEd, PECO, BGE, PHI, and Generation.
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