In a report released yesterday, Neil Kalton from Wells Fargo maintained a Hold rating on Xcel Energy (XEL – Research Report), with a price target of $57.00.
Neil Kalton’s Hold rating on Xcel Energy is influenced by the uncertainty surrounding the company’s wildfire risks. Xcel Energy has been associated with two major wildfires, which has cast a shadow over its otherwise solid performance. Although Xcel Energy has set up a claims process and estimated probable losses for the most recent Smokehouse Creek Fire, and despite having insurance coverage, the financial impact of these events remains difficult to fully ascertain. This difficulty in quantifying future wildfire risks is a key concern for investors, especially until legislative financial protections for utilities are potentially established.
Aside from the wildfire concerns, Xcel Energy’s operations are doing quite well, with a first-quarter EPS showing a significant year-over-year increase and the company on track to meet its guidance for the year. Kalton acknowledges the company’s strong operational performance and projects a continued earnings growth. However, the potential for substantial liabilities and the costs associated with higher equity financing due to wildfire risk have led to a slight reduction in the growth rate projection for the stock. Consequently, these mixed factors contribute to the decision to maintain a Hold rating, with a lowered price target reflecting the balance of these positive operational aspects and the uncertainties linked to wildfire-related liabilities.
In another report released on April 19, RBC Capital also maintained a Hold rating on the stock with a $68.00 price target.
XEL’s price has also changed slightly for the past six months – from $59.470 to $55.010, which is a -7.50% 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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