On Tuesday, Mizuho (NYSE:MFG) Securities adjusted its outlook on shares of TXNM Energy (NYSE: TXNM), increasing the stock's price target to $50 from the previous $44 while maintaining a Neutral rating. The firm noted recent developments in regulatory proceedings that are poised to benefit the energy company.
The stock has shown strong momentum, gaining over 31% in the past six months and currently trading near its 52-week high of $49.70. According to InvestingPro, TXNM has demonstrated consistent shareholder returns, having raised its dividend for 13 consecutive years.
Last week, TXNM Energy's subsidiary, PNM, reached an unopposed settlement in its New Mexico rate case. This agreement, if approved, would raise PNM's authorized Return on Equity (ROE) to 9.45%, a bump from the currently authorized 9.26%.
Moreover, the settlement proposes to enhance the equity ratio to 51% from the existing 50%. The analyst from Mizuho highlighted that these changes reflect ongoing improvements in the state's utility regulation, contrasting with PNM's previous rate case that was fully litigated.
On the Texas front, TXNM's other subsidiary, TNMP, has achieved a settlement in principle regarding its System Resiliency Plan (SRP). Furthermore, TNMP has been earmarked for approximately $750 million in capital opportunities identified in the Electric Reliability Council of Texas (ERCOT) Permian Basin Reliability Study. This opportunity presents further potential upside from the resolution of disputed projects expected to occur this week.
The Mizuho analyst pointed out that TXNM Energy's shares are currently trading at a 3% P/E discount compared to its industry group, though InvestingPro analysis suggests the stock is trading above its Fair Value.
With a current P/E ratio of 24.93x and a significant debt-to-equity ratio of 2.27, investors seeking deeper insights can access comprehensive valuation metrics and 12 additional ProTips through InvestingPro's detailed research report, part of its coverage of over 1,400 US stocks.
In other recent news, TXNM Energy reported second quarter 2024 earnings per share at $0.60, and confirmed its annual guidance range of $2.65 to $2.75 per share. The company also announced a significant infrastructure investment plan of $600 million aimed at enhancing its distribution system.
Evercore ISI raised TXNM Energy's stock price target from $41.00 to $47.00, maintaining an In Line rating. Analyst firms Jefferies and Scotiabank (TSX:BNS) initiated coverage on TXNM Energy shares, with Jefferies assigning a Buy rating and Scotiabank recommending a Sector Perform rating.
In other company news, TXNM Energy announced the retirement of its CFO, Elisabeth A. Eden, no sooner than March 15, 2025, and the appointment of Brian G. Iverson as the new General Counsel. These are some of the recent developments for TXNM Energy.
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