Analyst Neil Kalton of Wells Fargo maintained a Hold rating on Xcel Energy (XEL – Research Report), with a price target of $64.00.
Geoff Meacham has given his Hold rating due to a combination of factors including valuation considerations and potential liability concerns. Xcel Energy’s stock is viewed as trading at a premium compared to its peers, with a price-to-earnings ratio approximately 10% higher based on the firm’s 2025 earnings per share estimates. This premium valuation, along with the uncertainties surrounding the Marshall Fire liability, where Xcel’s power lines have been indicated as a probable cause of a second ignition point, contributes to a cautious stance on the stock. Although there is no direct evidence of design or maintenance defects, the legal outcome remains uncertain and could hang over the company for an extended period.
Additionally, Xcel’s updated capital expenditure (CapEx) forecast, which is expected to support a 7%+ compound annual growth rate in earnings per share, is seen as a positive. However, the financing of this plan involves substantial equity needs, estimated at around 15% of the current market cap. The planned equity issuance is intended to fund regulated growth CapEx, which is favorable, but the ultimate benefit to earnings will depend on the price at which the new equity is issued. This factor, combined with the overhang of potential legal liabilities, justifies the Hold rating despite the company’s strong growth outlook.
According to TipRanks, Kalton is a 4-star analyst with an average return of 5.1% and a 56.60% success rate. Kalton covers the Utilities sector, focusing on stocks such as DTE Energy, Eversource Energy, and PPL.
In another report released on January 17, Barclays also maintained a Hold rating on the stock with a $62.00 price target.
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Xcel Energy (XEL) Company Description:
Xcel Energy Inc. engages in generating, purchasing, transmitting, distributing, and selling electricity. It generates electricity through nuclear, natural gas, coal, hydroelectric, wood/refuse, solar, and wind energy sources. The company sells to residential, commercial, and industrial customers in eight Western and Midwestern states.
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