Mizuho Remains Bullish On CMS Energy Amid Natural Gas Rate Case; Trims Price Target

  • Mizuho analyst Anthony Crowdell reiterated a Buy rating on CMS Energy Corporation CMS, lowering the price target to $68 from $69
  • CMS Energy is likely to bear the brunt of the hurdles of increased regulatory scrutiny, which would harm the growth outlook in the future.
  • In view of CMS's natural gas rate case in Michigan, the analyst expects The Michigan Public Service Commission to use a 15-year average forecast for gas sales, consistent with how CMS filed its natural gas rate case, compared to the 5-year average used by the Attorney General, which was severely impacted by the pandemic.
  • The analyst notes that AG projects residential sales to decline 0.5% annually, while CMS projects sales to decline 2.6% year-over-year. 
  • On the commercial side, the AG projects sales rising 0.2%, while CMS projects a decrease of 4.4%.
  • The analyst believes CMS is one of the high-quality names with a proven track record of consistently delivering within its long-term growth rate. 
  • The analyst expects the MPSC to adopt CMS's sales forecast methodology.
  • Price Action: CMS shares are trading higher by 1.22% at $61.26 on the last check Wednesday.
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