On Thursday, Scotiabank (TSX:BNS) analyst Andrew Weisel upgraded CenterPoint Energy (NYSE:NYSE:CNP), a $20.5 billion utility company, from Sector Perform to Sector Outperform, while also raising the price target to $35.00 from the previous $30.00. According to InvestingPro data, analyst targets now range from $29 to $37, reflecting varied outlooks for this historically stable stock with a beta of 0.95. The upgrade follows a period of challenges for the company, including the impacts from Hurricane Beryl in July and subsequent criticisms of the company's performance.
Weisel expressed a positive outlook for the energy company, indicating that the difficulties experienced around the hurricane's aftermath could be considered a thing of the past. The analyst pointed to the Houston Electric rate case as a potential turning point for the stock, suggesting that even a neutral outcome, rather than a significant win, could help rerate CenterPoint Energy's shares. InvestingPro analysis reveals the company's strong dividend track record, maintaining payments for 54 consecutive years, with a current yield of 2.67%.
The settlement terms of the rate case are anticipated to be reasonable, and following this, the regulatory calendar for CenterPoint Energy is expected to be less eventful. The analyst highlighted the company's strong demand growth, capital expenditure outlook, and operational and maintenance controls as factors supporting an estimated earnings per share (EPS) growth of approximately 7.5%, which is above the peer average of around 6.5%.
The increased price target to $35 reflects a new valuation approach by Scotiabank, applying a 10% premium to the sector anchor multiple of 16 times. This adjustment is based on the firm's 2027 EPS estimate, which has been rolled forward from the previous 2026 estimate. With these considerations, Weisel sees a 14% upside potential for CenterPoint Energy's stock and recommends it as Sector Outperform.
In other recent news, CenterPoint Energy has seen a series of significant developments. Board member Barry T. Smitherman has announced his resignation, effective December 31, 2024, to pursue other endeavors. The company reported Q3 earnings per share of $0.31, meeting consensus estimates, and reiterated its 2024 guidance range of $1.61 to $1.63. Furthermore, CenterPoint Energy initiated its 2025 non-GAAP EPS guidance at $1.74 to $1.76 per share, indicating an 8% growth from 2024.
Several analyst firms have updated their ratings and price targets for CenterPoint Energy. UBS upgraded the company from Neutral to Buy and increased the price target to $37.00. BMO (TSX:BMO) Capital Markets maintained a Market Perform rating but raised the price target to $34.00. Similarly, Mizuho (NYSE:MFG) Securities and Scotiabank increased their price targets to $30, maintaining neutral and sector perform stances respectively.
In regulatory news, CenterPoint Energy has submitted a filing to the Public Utility Commission of Texas to resume settlement discussions related to the Houston Electric rate case. The company has also planned a $4.9 billion investment for 2025, contributing to a 10-year capital plan of $47 billion. These are the latest developments for CenterPoint Energy.
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