On Monday, Jefferies analyst Julian Dumoulin-Smith adjusted the price target for Sempra Energy (NYSE:SRE) shares, reducing it to $96 from the previous $102, while reaffirming a Buy rating for the company. Currently trading at $82.93 with a market capitalization of $52.5 billion, Sempra appears overvalued according to InvestingPro Fair Value metrics.
In a statement, Dumoulin-Smith highlighted several factors influencing the decision. The anticipation for Oncor's capital plan update was noted as a key point of interest for the fourth quarter 2024 earnings call, with the company maintaining strong financial health as indicated by InvestingPro's FAIR rating. Additionally, the analyst pointed out that liquefied natural gas (LNG) prospects are becoming increasingly significant due to recent policy shifts by the new administration. The company has demonstrated consistent shareholder returns, maintaining dividend payments for 27 consecutive years.
The ongoing issue of California wildfires was acknowledged as a recurring concern, yet Dumoulin-Smith believes that Sempra is in a stronger position than its competitors to navigate these challenges. The possibility of long-term LNG project expansion updates was also mentioned as a potential development, with the expectation that there would be no alteration to the long-term earnings per share compound annual growth rate (CAGR) against the current backdrop.
Despite these positive outlooks, the analyst warned of near-term risks for the 2025 earnings per share, particularly due to return on equity (ROE) pressure coinciding with Oncor's ramp-up period. Nevertheless, Jefferies reiterated a Buy rating on Sempra Energy stock, suggesting confidence in the company's overall trajectory. For deeper insights into Sempra's valuation and financial health metrics, investors can access comprehensive analysis through InvestingPro's detailed research reports, available for over 1,400 US stocks.
In other recent news, Sempra Energy's subsidiaries, San Diego Gas & Electric Company (SDG&E) and Southern California Gas Company (SoCalGas), have received approval from the California Public Utilities Commission for rate increases. SDG&E's revenue requirement for 2024 has been approved at $2.699 billion, a 7.5% increase from the previous year, while SoCalGas has been granted a revenue requirement of $3.806 billion for 2024, a 9.3% increase from 2023. Both companies are also authorized to recover costs for specific projects and programs, subject to further approval.
Additionally, Sempra Energy has been upgraded to an Overweight rating from an Equalweight status by Morgan Stanley (NYSE:MS). The upgrade aligns with the upward revision of earnings estimates by seven analysts.
Sempra Energy has also disclosed its financial results for the third quarter of 2024. The earnings call, led by Chairman and CEO Jeff Martin and CFO Karen Sedgwick, acknowledged potential discrepancies between projected and actual results due to factors outlined in SEC filings.
These recent developments provide crucial information for investors, shedding light on Sempra Energy's progress in a competitive and regulatory environment.
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