On Monday, Eversource Energy (NYSE:ES) received a new stock rating from a major investment firm. Jefferies initiated coverage on the utility company with an Underperform rating and set a price target of $52.00. This target implies a total shareholder return (TSR) that is approximately 15% below the current market valuation.
The firm highlighted several challenges that could impact Eversource Energy's financial performance. According to the investment firm, Eversource faces potential risks associated with upcoming rate cases and the need for costly credit repair, which could lead to an annual dilution of 4-5%. Additionally, lingering construction risks related to offshore wind projects were cited as a concern.
Jefferies also pointed out that Eversource's earnings per share (EPS) compound annual growth rate (CAGR) is projected at around 1%, with flat EPS expected in the fiscal year 2025. The firm's analysis suggests that their forecast for the fiscal years 2027-28 is approximately 14% below the consensus.
This new coverage and the associated price target reflect the investment firm's cautious stance on Eversource Energy's prospects. The firm's analysis suggests that the utility company has a multitude of hurdles to clear in order to justify its current stock valuation in the eyes of investors.
In other recent news, Eversource Energy, a major utility company, reported a GAAP loss of $0.33 per share in its third-quarter earnings call, largely due to its strategic exit from the offshore wind sector.
This exit resulted in a net loss of $524 million. However, the company's recurring earnings per share increased to $1.13, up from $0.97 year-over-year. Eversource also updated its full-year 2024 recurring EPS guidance to $4.52 to $4.60.
The company announced plans to invest nearly $24 billion in infrastructure by 2028, with significant allocations for transmission and electric distribution. Furthermore, Eversource secured $110 million in federal funding for clean energy initiatives and received approval for a $600 million Electric Sector Modernization Plan.
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