BMO Capital Markets has adjusted its outlook on Ameren Corp . (NYSE:AEE), raising the utility company's price target to $87.00 from $84.00. The firm maintained its Outperform rating on the stock.
The revision follows Ameren's second-quarter earnings, which surpassed both BMO Capital's and consensus estimates, with reported earnings per share (EPS) of $0.97 against the anticipated $0.93 and $0.94, respectively.
The analyst at BMO Capital highlighted several key factors contributing to the positive assessment of Ameren. The company's second-quarter performance was bolstered by higher than expected EPS.
Additionally, Ameren's future prospects look promising due to a positive load growth outlook, which is likely to be reflected in the updated Missouri Integrated Resource Plan (MO IRP) set for February 2025. The outlook is further supported by potential economic gains from data centers and development projects.
Ameren is also expected to benefit from potential long-term investment opportunities in transmission related to the Midcontinent Independent System Operator's (MISO) Long Range Transmission Planning (LRTP) Tranche 2.1 and 2.2 portfolios, which represent significant infrastructure projects valued between $23 billion and $27 billion. These investments are anticipated to provide growth avenues for the company.
Moreover, the analyst pointed to a more favorable outcome from the Illinois Multi-Year Rate Plan (MYRP) rehearing and revised plan, which could offer a more stable regulatory environment for Ameren.
Ameren reported for the second quarter of 2024 an increase in earnings per share (EPS) to $0.97, up from $0.90 in the same quarter of the previous year.
The company anticipates a compound annual earnings growth rate of 6% to 8% from 2024 to 2028, and forecasts an EPS range of $4.52 to $4.72 for the year. Ameren has a robust investment pipeline valued at over $55 billion and plans to issue approximately $300 million of common equity in 2024.
The company is experiencing customer growth with data center inquiries and has executed a construction agreement for a 250-megawatt data center. Regulatory advancements include approval of solar and natural gas projects in Missouri and a securitization order for Rush Island Energy Center retirement. However, regulatory changes and tariffs for new customers are potential challenges that need to be addressed.
InvestingPro Insights
As Ameren Corp. (NYSE:AEE) garners a positive outlook from BMO Capital Markets, real-time data from InvestingPro enriches the narrative with key financial metrics. The utility company's market capitalization stands at a robust $21.39 billion, indicating its substantial presence in the sector. Despite a challenging environment, Ameren has demonstrated resilience with a price-to-earnings (P/E) ratio of 18.27, which, while on the higher side, is substantiated by the company's consistent performance.
InvestingPro Tips highlight Ameren's commitment to shareholder returns, with a noteworthy track record of raising its dividend for 10 consecutive years and maintaining dividend payments for 27 consecutive years. This consistency is a testament to the company's stable financial management and its ability to navigate market cycles. Additionally, the positive revision by four analysts for Ameren's upcoming earnings suggests confidence in the company's financial prospects.
Investors should note that Ameren's stock has experienced a strong return over the last month, with a 13.83% increase in price total return, underscoring a bullish sentiment in the market. For those seeking more in-depth analysis, InvestingPro provides numerous additional tips, offering a comprehensive look at companies like Ameren. With these insights, investors can make informed decisions backed by the latest data and expert analysis.
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