Xcel Energy (XEL – Research Report), the Utilities sector company, was revisited by a Wall Street analyst on January 26. Analyst Anthony Crowdell from Mizuho Securities remains neutral on the stock and has a $64.00 price target.
Anthony Crowdell’s Buy rating for Xcel Energy is grounded on a mixture of the company’s steady growth factors and financial strategies. Crowdell notes that Xcel Energy trades at an approximately 8% P/E premium relative to its peers, and he anticipates the potential for this to expand to a low-double-digit premium. The rationale behind this optimism includes Xcel Energy’s above-average 9% rate base growth, robust projected EPS growth in the upper-half of the 5-7% range, and a low risk of rate case issues for the current year. Moreover, expected resource filings across several of Xcel’s operating regions could extend the company’s capital expenditure opportunities through the end of the decade, providing a clear runway for sustained growth.
Furthermore, Crowdell highlights Xcel Energy’s updated long-term earnings growth rate of 5-7%, reaffirmed during the 4Q earnings call, with expectations to hit the higher end of this spectrum starting in 2025. The company’s conservative approach and revised capital expenditure outlook, bolstered by an additional $5 billion primarily for renewable generation investments, suggest a strong and lengthened growth plan. Despite an increase in equity needs by $1.5 billion to support these investments, Xcel Energy’s strategies for lowering its dividend payout ratio and capitalizing on tax credit sales are seen as mitigating factors that should help in reducing the overall equity requirements. This financial prudence, combined with the company’s solid investment in renewables, underpins Crowdell’s confidence in the stock’s performance and justifies the Buy rating.
In another report released on January 23, Evercore ISI also maintained a Buy rating on the stock with a $68.00 price target.
XEL’s price has also changed slightly for the past six months – from $65.050 to $59.390, which is a -8.70% drop .
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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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