On Wednesday, Guggenheim updated its outlook on New Jersey Resources (NYSE:NJR), increasing the price target to $49.00 from the previous $46.00, while keeping a Neutral rating on the stock. The revision follows New Jersey Resources' fiscal fourth-quarter 2024 report, where the company presented its financial results and future guidance.
The company disclosed its Non-GAAP Financial Earnings per Share (NFEPS) for the fiscal year's fourth quarter and set forth its NFEPS guidance for 2025, which is based on a revised rebase of $2.83. This updated rebase compares to a prior figure of $2.25 in 2022, indicating an 8% compound annual growth rate (CAGR) in NFEPS. Additionally, New Jersey Resources reaffirmed its long-term growth rate.
In a strategic move to streamline operations, New Jersey Resources announced the divestiture of its residential solar portfolio, Sunlight Advantage, for $132.5 million. The company explained that this sale is aimed at simplifying the Clean Energy Ventures (CEV) business and concentrating on the expansion of commercial solar initiatives. The proceeds from the sale are intended to bolster the company's balance sheet and to reinvest in projects that promise higher returns.
New Jersey Resources highlighted its robust pipeline of solar projects, which totals approximately 1.1 gigawatts. The company is poised to leverage opportunities in commercial solar projects that are expected to deliver high single-digit unlevered returns.
In addition, last week, New Jersey Resources received a favorable outcome from the New Jersey Board of Public Utilities (BPU) regarding the settlement of New Jersey Natural Gas's (NJNG) rate case.
This positive regulatory development, combined with ongoing investments in rate base, consistent customer growth, and a strong pipeline of commercial solar projects, supports the company's projection of a long-term NFEPS growth range of 7%-9%. There are also potential upside opportunities that are not factored into the current base plan.
Following these developments, Guggenheim has adjusted its price target to reflect a marginally higher multiple, reaffirming its Neutral rating on New Jersey Resources stock.
In other recent news, New Jersey Resources (NJR) has reported surpassing its Net Financial Earnings Per Share (NFEPS) guidance for the fourth consecutive year, ending fiscal year 2024 with an NFEPS of $2.95, an increase from $2.70 in the previous year. The company has set a growth target of 7-9% for NFEPS and aims for a total shareholder return of 11-13%. Additionally, NJR's subsidiary, New Jersey Natural Gas, secured a $157 million annual revenue increase.
In analyst coverage, Mizuho (NYSE:MFG) maintained a Neutral rating on NJR with a steady price target of $47.00. This comes after the company's recent sale of its residential solar portfolio, valued at approximately $133 million, and the reiteration of its long-term growth rate.
Looking forward, NJR plans capital expenditures ranging from $1.3 to $1.6 billion over the next two years, focusing on utility infrastructure and clean energy. Initial guidance for fiscal year 2025 is set between $3.05 and $3.20 per share.
InvestingPro Insights
New Jersey Resources (NYSE:NJR) continues to demonstrate financial resilience and strategic focus, as highlighted by recent InvestingPro data and tips. The company's market capitalization stands at $5.04 billion, with a P/E ratio of 17.64, indicating investor confidence in its earnings potential. This aligns with the company's reaffirmed long-term growth rate and the positive regulatory outcome from the New Jersey BPU.
InvestingPro Tips reveal that NJR has raised its dividend for 29 consecutive years and has maintained dividend payments for 54 consecutive years. This impressive track record of dividend growth, coupled with a current dividend yield of 3.55%, underscores the company's commitment to shareholder returns. This is particularly relevant given NJR's recent divestiture of its residential solar portfolio and its plans to reinvest in higher-return projects.
The company's stock is trading near its 52-week high, with a one-year price total return of 24.27%. This performance reflects the market's positive reception of NJR's strategic moves, including the simplification of its Clean Energy Ventures business and its focus on commercial solar projects.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights on New Jersey Resources, with a total of 8 tips available for this stock.
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