On Tuesday, BofA Securities updated its outlook on Portland General Electric Company (NYSE:POR), reducing the price target to $43.00 from the previous $46.00, while keeping an Underperform rating on the stock. Currently trading at $44.20 with a P/E ratio of 13.1, InvestingPro analysis suggests the stock is slightly undervalued.
The adjustment follows the recent decision by the Public Utility Commission of Oregon (OPUC), which on December 20, 2024, issued a final order in the utility's 2025 general rate case.
The OPUC's final order allows for a $99.5 million annual revenue increase, which is lower than the $208 million initially requested by the company, net of net variable power costs (NVPC). The authorized return on equity (ROE) was set at 9.34%, a slight decrease from the previously expected 9.5%. The company has demonstrated consistent shareholder returns, maintaining dividend payments for 19 consecutive years with a current yield of 4.6%. Additionally, the order established a 50% equity ratio and a $6.8 billion rate base, with the new rates scheduled to take effect on January 1, 2025.
The outcome of the OPUC's final order did not meet the analyst's expectations, which had forecasted a higher revenue increase of $126 million and an authorized ROE of 9.5%. Despite this, Portland General Electric has not made any changes to its 2024 expectations and plans to release its 2025 adjusted earnings guidance, along with long-term earnings and dividend growth guidance, following the fourth-quarter 2024 results in the first quarter of 2025.
Due to the less favorable terms of the final order than anticipated, BofA Securities has revised downward its earnings per share (EPS) estimates for Portland General Electric for the years 2025 to 2028. The firm reiterated its Underperform rating, indicating a cautious stance on the company's stock performance going forward. For deeper insights into POR's valuation and financial health metrics, including 7 additional key ProTips and comprehensive analysis, visit InvestingPro, where you'll find detailed research reports and expert analysis.
In other recent news, Portland General Electric Company (NYSE:GE) (PGE) has announced a significant increase in GAAP net income for Q3 2024, reaching $94 million, up from $47 million in Q3 2023. This growth was driven by improved power cost performance, effective cost management, and strong demand, especially from the semiconductor and data center sectors. PGE has also secured a $300 million unsecured credit agreement with a group of lenders, which is set to mature on November 17, 2025. The company has already drawn $220 million from this facility.
Among recent developments, PGE has adjusted its full-year earnings guidance to $3.08 to $3.18 per diluted share and is expanding its renewable energy capacity. The company plans to add 500 megawatts of renewable hydro capacity and integrate solar and battery projects. Despite ongoing legislative efforts related to wildfire management and potential litigation from rate case discussions, PGE continues its commitment to providing safe, reliable, and affordable energy. The company maintains long-term earnings and dividend growth guidance of 5% to 7% as part of its recent developments.
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