Portland General Electric's Data Centers, Industry Growth Fuel Stock Upgrade

KeyBanc Capital Markets analysts upgraded Portland General Electric Company POR to Overweight from Sector Weight, with a $52 price target.

The analysts write that the company is seeing strong power demand growth due to high-tech and semiconductor industries.

The region is also appealing for data centers, especially those needing low latency, thanks to cross-Pacific subsea cables, adds the analysts.  

The analysts say that with industrial customers, who make up about 30% of the total load and are growing at 7.5%, POR’s overall load growth is robust.

The analysts write that recent updates to POR’s power cost recovery mechanism have improved earnings by reducing exposure to volatile costs and cutting regulatory lag with renewable trackers.

They further add that the company is now aiming to enhance capital recovery further by including standalone batteries in the tracker and refining the investment recovery mechanism.

Portland General Electric is managing a larger RFP this time, seeking ~1-2 GW of capacity compared to 700 MW previously and the shortlist will be announced in August, with financial selection by year-end. The analysts expect a win rate above the 25% estimate, which could boost growth toward the higher end of the 5-7% range.

Portland expects to report second-quarter FY24 results on July 26, 2024.

Investors can gain exposure to the stock via Series Portfolios Trust InfraCap Small Cap Income ETF SCAP and VictoryShares US Small Cap High Div Volatility Wtd ETF CSB.

Price Action: POR shares are up 1.53% at $47.06 at the last check Monday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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