11 Utility Stocks Get New Ratings, Forecasts After Recent Volatility: 'Higher Quality ... Low Valuation'

Following the recent volatility in the utilities space, KeyBanc Capital Markets analysts changed ratings and forecasts on several stocks, including some that were considered value stocks.

“Given the deep dislocation that we're witnessing in the space, we advise investors to focus on higher quality names, which currently can be picked up at historically low valuation,” analyst Sophie Karp wrote in the note.

Rating Upgrades

• CMS Energy Corporation CMS: From Sector Weight to Overweight, with a price target of $57.

Karp said CMS Energy is “among the better managed vertically integrated utilities in our space, which is also benefitting from positive load growth trends in MI.”

• DTE Energy Co DTE: From Sector Weight to Overweight, with a price target of $106.

“We believe that DTE should benefit from the positive load growth trends and increased resilience spending in MI,” the analyst wrote.

• CenterPoint Energy Inc CNP: From Sector Weight to Overweight, with a price target of $29.

“A constructive legislative session in TX provides several positives to reduce regulatory lag including the ability to file two DCRFs per year and a resilience spending rider,” she said.

• Pinnacle West Capital Corporation PNW: From Underweight to Sector Weight, while removing the price target.

“We expect PNW's earnings to be lumpy over the next few years, and we believe that favorable summer weather and recent regulatory outcomes warrant a more constructive view on the stock,” Karp said.

• Entergy Corp ETR: From Sector Weight to Overweight, with a price target of $97.

At the current valuation, the stock reflects all the issues at the company, the analyst stated.

Check out other analyst stock ratings.

Reiterations With Forecast Changes

• Xcel Energy Inc XEL: Overweight rating, while reducing the price target from $71 to $62.

Karp mentioned the market seemed to be underappreciating “the substantial growth opportunities” at the company.

• WEC Energy Group Inc WEC: Overweight rating, while reducing the price target from $102 to $94.

“Given its operational execution and confidence in the narrow LT growth rate, we believe WEC continues to warrant the premium its trades at relative to peers,” Karp wrote in the note.

• Ameren Corp AEE: Overweight rating, while reducing the price target from $91 to $82.

“We expect that a constructive outcome from the pending IL multiyear rate case and the LT capex upside from the MISO long-range transmission planning program should help AEE to regain some lost luster from the IL regulatory noise around the ROE considerations for the pending rate case,” the analyst said.

• Duke Energy Corp DUK: Overweight rating, while reducing the price target from $109 to $96.

“DUK is well positioned as a core utility investment that operates in the Southeast across constructive regulatory jurisdictions,” Karp mentioned.

• FirstEnergy Corp FE: Overweight rating, while reducing the price target from $45 to $41.

The stock continued to trade at an “unwarranted discount to the sector,” Karp stated.

Rating Downgrades

• NextEra Energy Inc NEE: From Overweight to Sector Weight, while removing the price target.

The analyst expressed concern about the company losing “practically losing access to NEP as an accretive capital recycling vehicle until rates moderate.”

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