On Friday, Citi reaffirmed its positive stance on Duke Energy (NYSE:DUK), maintaining a Buy rating and a price target of $130.00. As a prominent player in the Electric Utilities industry with a market capitalization of $84.28 billion, Duke Energy has attracted positive analyst attention, with InvestingPro data showing four analysts recently revising their earnings estimates upward.
The firm's analyst highlighted the potential for an accelerated earnings growth outlook following Duke Energy's anticipated new capital plan announcement in February, alongside Q4 results.
The plan is expected to increase the company's capital expenditure by more than $5 billion. The company's stable profile is reflected in its low price volatility, with a beta of 0.46, while maintaining a solid dividend yield of 3.83% and an impressive track record of raising dividends for 17 consecutive years.
The analyst pointed to three main areas of focus for Duke Energy in 2025: load growth acceleration, capital markets, and earnings per share (EPS) growth. These factors are seen as key drivers for the company leading up to the upcoming catalyst. Citi's analysis suggests that Duke Energy's EPS compound annual growth rate (CAGR) could potentially increase by over 1% annually.
This would be contingent on the company executing an increase in at-the-market (ATM) offerings, joint support notices (JSNs), and minority interest sales in Kentucky and Ohio, combined with typical regulatory treatment on capital expenditures.
Duke Energy's strategy involves a range of financial tools to support its growth and minimize the need for block equity issuance. The analyst's commentary indicates that the utility company may use several methods to achieve this, which would help in managing its equity needs while pursuing its expanded capital expenditure plan.
The company's larger capital plan, which is currently set at $73 billion, is poised to receive a boost that could further enhance Duke Energy's investment in infrastructure and services. This anticipated increase in capital spending is a significant part of the analyst's thesis on why the stock retains a Buy rating.
Investors are now looking ahead to February when Duke Energy is expected to unveil its updated capital plan. The details of this plan will provide further insights into the company's financial strategies and growth prospects, as outlined by the Citi analyst.
For investors seeking deeper analysis, InvestingPro offers comprehensive research reports with detailed financial health metrics and additional ProTips that can help inform investment decisions in this evolving utility sector landscape.
In other recent news, Duke Energy reported a decrease in third-quarter earnings per share to $1.62, primarily due to costs related to Hurricanes Debby, Helene, and Milton.
Despite these challenges, the company managed to restore power to a significant number of affected customers. Duke Energy's management also confirmed the full-year 2024 earnings guidance, projecting it to be within the $5.85 to $6.10 range, albeit leaning towards the lower half due to the financial burdens from recent storms.
In the wake of these developments, BMO (TSX:BMO) Capital adjusted its price target for Duke Energy, reducing it to $124 from the previous $128, while maintaining an Outperform rating on the stock. The revised price target is based on a sum-of-the-parts and market-to-model analysis, indicating a continued expectation for the company's performance to outpace the broader market.
Looking ahead, Duke Energy is forecasting a 5% to 7% earnings per share growth rate through 2028, backed by regulatory approvals and infrastructure investments. The company plans on implementing new rate structures in 2025 to aid in cost recovery and maintain service affordability. Additionally, Duke Energy is targeting the monetization of $300 million to $500 million in energy tax credits annually to improve financial flexibility. These are among the recent developments that highlight Duke Energy's strategic planning and resilience despite the challenges of a severe hurricane season.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.