WEC Energy: A Brighter Outlook Despite Regulatory Hurdles, Says Analyst

Mizuho Securities analyst Anthony Crowdell upgraded WEC Energy Group Inc WEC to Buy from Neutral at a price target of $98.
The analyst thinks the ongoing WI regulatory concerns are overblown as the company has resolved most of its WI filings early this year and now covers WI utilities through 2024.
Also, Crowdell cites the ICC staff testimony in the People's Gas (PGL) and North Shore Gas (NSG) cases, published this month, as constructive. The analyst sees a revenue recommendation of around 88% of WEC's initial request and an ROE of 9.83% (vs 9.90 requested by PGL and NSG) as the favorable outcome of the case.
Despite a challenging hearing on WEC's multi-party case settlement in December 2022, the analyst believes the company's WI utilities are permitted above-average ROE of 9.80%, along with a higher authorized equity ratio of 53.0% (vs. 52.5% earlier).
This month, WEC reported Q1 2023 revenues of $2.89 billion, down from $2.91 billion, beating the consensus of $2.85 billion and EPS of $1.61, surpassing the consensus of $1.59.
The analyst reiterated the EPS estimate of $4.62 for 2023, $4.90 for 2024 and $5.24 for 2025, with forecast rate base growth and EPS growth of around 7% and 6.7%, respectively, through 2025.
Price Action: WEC shares are trading lower by 0.31% at $88.99 on the last check Thursday.

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