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BofA Securities analyst Ross Fowler reinstated coverage on four US utilities in the Great Plains.
The analyst reinstated the Buy rating at Evergy, Inc. (NASDAQ:EVRG) and MDU Resources Group, Inc. (NYSE:MDU).
Meanwhile, Fowler reinstated the Neutral rating on OGE Energy Corp (NYSE:OGE) and Underperform rating on Black Hills Corporation (NYSE:BKH).
EVRG: The analyst reinstated Buy rating with a price target at $66. The analyst says that despite trading at a 10% discount compared to peers on a 2026E P/E basis, the improving Kansas regulatory environment, which supports higher rate base growth, appears undervalued.
The analyst estimates FY24, FY25 and FY26E EPS at $3.86, $4.09 and $4.30, respectively, all above consensus.
Fowler writes that consensus EPS estimates for FY26 and FY27 remain largely unchanged despite the benefits from House Bill 2527.
MDU: The analyst reinstated Buy rating with a price target of $28. Fowler believes the current 15% discount to the electric utility peer group is unjustified, considering MDU’s ongoing transition to a pure-play regulated utility and pipeline operator, along with its projected 6-8% EPS growth rate through the planning period.
Although the company’s multi-jurisdictional presence may lead to some delays in recovery, the analyst expects sustained support for earned ROEs at the electric utility, driven by a strong pipeline of data center customer connections in areas experiencing transmission congestion.
OGE: The analyst reinstated Neutral rating with a $40 price target. While the analyst values OGE’s execution and growth potential from data center and crypto-mining load, the challenging regulatory environment in Oklahoma and significant capital investments needed for resource adequacy present risks.
Fowler expects EPS estimates of $2.14, $2.28, and $2.43 for FY24, FY25, and FY26, respectively, in line with consensus estimates.
BKH: The analyst reinstated Underperform rating with a $59 price target. The analyst says that BKH’s electric utility operations are poised for growth with rising residential, commercial, and data center load, which currently contributes 5% to EPS and is expected to exceed 10% by 2028.
Fowler expects rate base expansion opportunities in South Dakota and Colorado to support a 7%+ CAGR. However, $1.6 billion in debt maturities from 2023 to 2028, with a 3.03% average interest rate, could create a ~$0.50 EPS headwind, exacerbating risks given BKH’s already low 4-6% target EPS CAGR, adds the analyst.
Fowler anticipates EPS estimates of $3.88, $4.13, and $4.35 for FY24, FY25, and FY26, below the consensus estimates of $3.92, $4.14, and $4.40, respectively.
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