On Wednesday, Jefferies began coverage on Consolidated Edison (NYSE:ED), assigning the stock a Hold rating with a price target of $108.00. The firm anticipates a potential increase in authorized Returns on Equity (ROEs) for the New York City electric and gas utility, which currently stands at 9.25%. The outcome of the O&R cases, expected later this year, is seen as an indicator for the upcoming CECONY cases to be filed in January 2025.
The analyst from Jefferies believes that Consolidated Edison could achieve the midpoint of its 5-7% earnings per share (EPS) growth guidance through 2028. This projection is slightly more optimistic than the current consensus, which estimates a 5.6% growth rate. Despite the positive growth outlook, the analyst's assessment is that the company's shares are presently trading at a fair value, leading to the decision to initiate coverage with a Hold rating.
The price target of $108.00 set by Jefferies suggests that they see limited upside potential for Consolidated Edison's stock at this time. The analyst's statement points to forthcoming regulatory decisions as key events that could influence the company's financial performance and growth trajectory.
As the market anticipates these regulatory outcomes, Consolidated Edison's stock will continue to be evaluated in the context of these developments. The Hold rating reflects a wait-and-see approach, taking into account the potential for regulatory changes to affect the company's earnings and stock valuation.
In other recent news, Consolidated Edison's second-quarter earnings report for 2024 showed an adjusted earnings per share (EPS) of $0.59, slightly under the BofA Securities estimate of $0.61 but above the consensus of $0.57. The company's operating revenue increased notably to $3.22 billion, primarily driven by higher demand for cooling during a heat wave. However, Consolidated Edison also saw a rise in operations and maintenance expenses, which were 13.9% higher than the same period last year.
In response to the earnings report, BofA Securities raised its price target for Consolidated Edison from $97.00 to $109.00, maintaining a Buy rating on the stock. Despite this, Barclays downgraded the company's stock from Equal Weight to Underweight, citing overvaluation and adjusted its price target to $92.
Consolidated Edison has maintained its full-year 2024 EPS guidance, projecting earnings between $5.20 and $5.40. BofA Securities forecasts an EPS of $5.34 for the full year 2024 and has adjusted its future earnings estimates for the company. The firm set the forecast for the fiscal year 2025 at $5.63, down from the previous $5.66, and for the fiscal year 2026 at $5.92, down from an earlier projection of $6.02.
InvestingPro Insights
Consolidated Edison's financial metrics and recent performance align with Jefferies' Hold rating and moderate growth outlook. According to InvestingPro data, the company's P/E ratio stands at 19.79, suggesting a reasonable valuation in line with the utility sector. The company's revenue for the last twelve months as of Q2 2024 was $14.81 billion, with a solid gross profit margin of 52.5%.
InvestingPro Tips highlight Consolidated Edison's strong dividend history, having raised its dividend for 49 consecutive years and maintained payments for 54 years. This track record supports the company's appeal to income-focused investors, with a current dividend yield of 3.25%. The stock's recent performance has been robust, with a 15.87% price total return over the past three months, trading near its 52-week high.
However, investors should note that 4 analysts have revised their earnings downwards for the upcoming period, which may reflect some caution about near-term growth prospects. For a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into Consolidated Edison's investment potential.
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