Citi Upgrades PG&E, Raises Price Target By 200%

PG&E Corporation PCG has been on a huge run since the company officially filed for bankruptcy in late January, and one Wall Street analyst said Tuesday that there’s plenty more upside remaining for PG&E stock.

The Analyst

Citi analyst Praful Mehta has upgraded PG&E stock from Neutral to Buy and raised his price target from $11 to $33.

The Thesis

The huge change in target price comes after recent indications from the California legislature and governor’s office suggest a shift in urgency level related to wildfire liability legislation.

Mehta said there are four reasons he now believes new liability legislation could be passed within two or three months:

The governor recently voiced California’s need for timely liability legislation, a much different tone than he took just a month ago.
Ratings agencies have said they need to see a clear, executable action plan related to the California utilities or else they will continue to downgrade their credit.
Bills such as SB235 provide means of funding for liability reform, including state support via taxes or changes to the state’s cap-and-trade program.
The governor-appointed strike team and Blue Ribbon force is expected to make a timely recommendation for practical solutions to California’s problems.

Mehta said news from the strike team will likely be the next major bullish catalyst for PG&E stock.

“With path to legislation limiting future wildfire liabilities getting clearer, [the] current price offers a great entry opportunity with upcoming catalyst,” Mehta wrote in the note.