Analyst Upgrades PPL, Bets Stock Will Re-Rate Higher: Here's Why

Shares of PPL Corp. PPL have had a prolonged period of underperformance, the company is a beneficiary of the Inflation Reduction Act, according to Bank of America Securities.

The PPL Analyst: Paul Zimbardo upgraded the rating for PPL from Neutral to Buy, while raising the price target from $29 to $33.

The PPL Thesis: The company’s stock has lagged utility peers by 6.5% year to date and by 16% since the beginning of 2021, while there is now “increasing visibility of catalysts to help re-rate the stock higher,” Zimbardo said.

“Since that update, the proposed EPA ‘Good Neighbor’ emission rules and pending Federal Inflation Reduction Act (IRA) are set to accelerate the generation transformation opportunity,” the analyst mentioned. “This should enhance the below-average 3-4% rate base growth profile."

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“The above-average balance sheet post divestment of WPD supports the positive capex inflection above the sub 4% we contemplate – with ~55% of spend across the portfolio rider eligible to mitigate any lag,” Zimbardo further wrote.

PPL Price Action: Shares of PPL had declined by 0.02% to $30.28 at the time of publication Monday.

Image courtesy of PPL website