Sempra Energy (NYSE:SRE) Receives Positive Outlook with BMO Capital Markets' Price Target Increase to $93
BMO Capital Markets has reaffirmed its Outperform rating on Sempra Energy (NYSE:SRE) and raised its price target to $93 from $90. This adjustment comes in light of a proposed decision by Administrative Law Judge Lakey that could impact the return on equity (ROE) for California utilities.
The proposed changes may lower the ROE for Southern California Gas (SoCalGas) and San Diego Gas & Electric (SDG&E) by 42 basis points. Despite this, BMO Capital Markets remains optimistic about Sempra Energy's performance.
The proposed decision involves a revision to the California Public Utilities Commission's cost of capital mechanism. If accepted, it is expected to reduce the utilities' ROE by approximately 2%, affecting BMO Capital's 2025 earnings per share (EPS) estimate for Sempra Energy.
BMO Capital has expressed confidence in Sempra Energy's medium-term sum of the parts (MTM SOTP) target price, with EPS estimates for 2024 to 2026 above consensus. The firm believes that Sempra Energy is well-positioned to navigate regulatory changes without significant financial impact.
Sempra Energy reported strong earnings for Q2 2024 and remains on track to meet full-year guidance. Despite a delay in the ECA LNG Phase 1 project, the company continues to expand its presence in Texas's energy infrastructure development.
BofA Securities has initiated coverage on Sempra Energy with a Buy rating, projecting positive earnings per share for the years ahead. With a stable market cap and a commitment to shareholder returns, Sempra Energy presents a compelling investment opportunity.
Investors should consider a broader set of financial metrics and analyst insights when evaluating Sempra Energy's performance. With a focus on sustainable growth and shareholder-friendly policies, Sempra Energy remains a strong contender in the market.
In conclusion, Sempra Energy's recent developments and positive outlook from key analysts indicate a promising future for the company. By staying informed and analyzing the company's financial health, investors can make well-informed decisions to maximize their returns in the evolving market landscape.