On Thursday, BMO (TSX:BMO) Capital Markets adjusted its outlook on Duke Energy (NYSE:DUK) stock, reducing the price target slightly to $109 from the previous $110 while maintaining an Outperform rating.
The revision follows a detailed quarterly analysis, which led to an updated estimate for the company's second-quarter 2024 earnings. The new forecast anticipates earnings of $1.01 per share, up from $0.91 per share in the same quarter of the previous year.
The anticipated improvement in year-over-year earnings is attributed to a range of factors within the company's Energy Utilities & Infrastructure (EU&I) segment. Notable contributors to the expected growth include a favorable weather comparison, increased load and customer growth in North Carolina, and rate relief from Duke Energy Carolinas (DEC), Duke Energy Progress (DEP), and Duke Energy Florida (DEF), alongside various financial mechanisms known as riders in the Midwest.
The analyst also highlighted upcoming events that are likely to capture investor attention. These include regulatory updates, particularly the comprehensive Florida rate case settlement and forthcoming Distributed Energy Infrastructure (DEI) testimony. Additionally, the North Carolina Carbon Plan hearings set for July 2024 and details on industrial volumes and balance sheet progress will be of interest to stakeholders.
The firm's Market Timing Model (MTM) Sum of the Parts (SOTP) valuation method was applied to determine the revised target price of $109. This approach considers the separate valuation of different segments of the business to arrive at an overall target price for Duke Energy's stock.
Despite the slight decrease in the price target, BMO Capital Markets continues to see Duke Energy as a favorable option for investors, as reflected in the maintained Outperform rating.
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