Pnm Resources (PNM – Research Report), the Utilities sector company, was revisited by a Wall Street analyst yesterday. Analyst Julien Dumoulin Smith from Bank of America Securities remains neutral on the stock and has a $44.00 price target.
Julien Dumoulin Smith has given his Buy rating due to a combination of factors surrounding PNM Resources’s financial outlook and regulatory environment. The analyst acknowledges that despite a less favorable General Rate Case (GRC) outcome, which has affected the projected earnings per share (EPS) in the short term, PNM still anticipates a compound annual growth rate (CAGR) of approximately 5.5% from 2020 to 2027. This growth is supported by a strong rate base CAGR of 11%, which provides a substantial buffer against potential equity dilution. Moreover, Dumoulin Smith maintains a positive stance, expecting earnings growth to recover and accelerate between 2025-2027 due to a well-shaped capital expenditure plan and future rate cases.
Dumoulin Smith also factors in the unique circumstances of the recent GRC, considering them not indicative of future regulatory treatment in New Mexico. With the expectation of more balanced outcomes in upcoming proceedings, there is optimism for a more favorable regulatory landscape. The analyst has adjusted the price objective to $44, reflecting a 15% upside potential and a -1x discount compared to the peer group, due to the recent GRC outcome. Despite the discount, PNM Resources is seen as an attractive acquisition target, with significant rate base growth, a favorable mix of jurisdictions, and potential for improved regulatory treatment, all contributing to the Buy rating.
In another report released on January 3, Wells Fargo also upgraded the stock to a Buy with a $44.00 price target.
PNM’s price has also changed moderately for the past six months – from $45.380 to $39.090, which is a -13.86% drop .
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Pnm Resources (PNM) Company Description:
Public Service Co. of New Mexico provides electricity and electric services. It offers payment options, billing, save money and energy and business energy analyzer. The company was founded in 1917 and is headquartered in Albuquerque, NM.
Read More on PNM:
- Wells Fargo upgrades PNM Resources to Overweight after Avangrid terminates deal
- Avangrid price target raised to $34 from $33 at Mizuho
- PNM downgraded to Neutral after deal termination at Mizuho
- PNM Resources downgraded to Neutral from Buy at Mizuho
- PNM Resources upgraded to Overweight from Equal Weight at Wells Fargo
