BMO Capital analyst James Thalacker upgraded the rating on Sempra Energy (SRE – Research Report) to a Buy today, setting a price target of $84.00.
James Thalacker has given his Buy rating due to a combination of factors that suggest Sempra Energy is well-positioned for growth. He highlights the company’s robust rate base and earnings growth, a supportive regulatory environment providing multi-year clarity, and a strong balance sheet that lessens the need for external equity or significant refinancing. Thalacker also points to the management’s proven track record of execution and the stock’s undervalued status, which he believes offers room for valuation multiple expansion.
Furthermore, Thalacker’s optimism is underpinned by Sempra’s regulated utility investment program, which is expected to substantially drive earnings growth through 2026. His analysis indicates that Sempra’s earnings per share (EPS) will grow at an approximate rate of 7%, aligning with the company’s targeted growth. The capital investment plans, particularly in regulated Transmission and Distribution (T&D), are expected to support a compound annual rate base growth of 9%. The expectation of additional capital investment and the growth at Oncor contribute to the favorable outlook, potentially leading to a higher regulated business mix and an increase in EPS. The recent successful equity offering further solidifies the financial foundation for the company’s forthcoming capital projects, enhancing Thalacker’s confidence in a Buy rating for Sempra Energy’s stock.
Thalacker covers the Utilities sector, focusing on stocks such as DTE Energy, CMS Energy, and Dominion Energy. According to TipRanks, Thalacker has an average return of 4.7% and a 59.15% success rate on recommended stocks.
In another report released on January 3, Ladenburg Thalmann & Co. also initiated coverage with a Buy rating on the stock with a $81.50 price target.
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Sempra Energy (SRE) Company Description:
Sempra Energy is an energy service company which engages in the sale, distribution, storage and transportation of electricity and natural gas. The company has over 35 million customers across North America, with a strong focus on the most attractive markets including California, Texas, Mexico and the LNG export market.
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