OGE Energy (OGE – 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 $35.00 price target.
Geoff Meacham has given his Hold rating due to a combination of factors surrounding OGE Energy’s financial outlook and upcoming regulatory events. His assessment acknowledges the improved visibility towards a 5-7% consolidated EPS compound annual growth rate (CAGR) for OGE, considering the potential for increased capital expenditure in the coming years. The expectation of a refresh in the FY24 guidance and an updated capital forecast, which may influence long-term EPS, supports a cautiously optimistic view. Furthermore, the potential offset of concerns regarding new, more costly debt issuances by a robust utility growth outlook adds to the rationale behind the Hold rating.
However, the looming Oklahoma rate case in December 2023 introduces a significant level of uncertainty. The possibility of adverse outcomes from this rate case presents a risk that could lead to a downside in EPS estimates. In addition, the price objective has been adjusted to $35 from $39, reflecting a conservative valuation approach amidst high-variance risk/reward considerations. While there is potential upside from capital expenditure plans, concerns about balance sheet erosion and the need for additional equity temper the enthusiasm. With these factors in mind, alongside OGE’s premium valuation relative to its peers, Meacham maintains a neutral stance, opting to monitor upcoming developments before altering his position.
In another report released on January 16, Ladenburg Thalmann & Co. also downgraded the stock to a Hold with a $34.00 price target.
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OGE Energy (OGE) Company Description:
OGE Energy Corp. is a holding company, which engages in the provision of physical delivery and related services for both electricity and natural gas. It operates through the Electric Utility and Natural Gas Midstream Operations segments. The Electric Utility segment generates, transmits, distributes, and sells electric energy in Oklahoma and Western Arkansas. The Natural Gas Midstream Operations segment involves gathering, processing, transporting, storing, and marketing of natural gas. The company was founded in August 1995 and is headquartered in Oklahoma City, OK.
Read More on OGE:
- Guggenheim says buy these utility stocks for 2024 outperformance
- OGE Energy price target lowered to $35 from $38 at Barclays
- OGE Energy downgraded to Neutral from Buy at Ladenburg
- OGE Energy price target raised to $38 from $37 at Barclays
- OGE Energy Corp. Board of Directors declares quarterly dividend
