On Friday, Mizuho Securities showed a positive shift in sentiment towards IDACORP, Inc. (NYSE: IDA), upgrading the stock from Neutral to Outperform. The firm also increased its price target on the shares to $116 from $102. The upgrade follows IDACORP's third-quarter update on October 31, which revealed a substantial rise in the company's capital expenditure (capex) guidance.
The utility company, following the completion of its Request for Proposals (RFPs), announced an impressive compound annual growth rate (CAGR) of 16.9% in its rate base, leading the industry. Furthermore, IDACORP has provided forward financing guidance for the first time, projecting around $1.3 billion in equity issuance between 2025 and 2028. This move is expected to offer additional clarity for investors, a development that has been highly anticipated.
According to Mizuho, IDACORP's stock is currently trading at approximately the group average price-to-earnings (P/E) multiple, based on their updated 2026 earnings per share (EPS) estimate of $6.41. The analyst firm believes that this valuation does not fully reflect IDACORP's robust growth prospects, favorable regulatory environment, and strong management team.
In light of these updates, Mizuho has revised its EPS estimates for IDACORP for 2025-2026 and raised the price target to $116.00, which implies a 12% P/E premium. The firm's upgrade to Outperform indicates a confidence in IDACORP's future performance and its potential to outpace the market.
In other recent news, Avista (NYSE:AVA) and Idaho Power have received an $85.6 million grant from the U.S. Department of Energy to upgrade the Lolo-Oxbow 230-kV transmission line. This project includes the construction of Idaho Power's new Pallette Junction Station, which will boost interregional transfer capacity by approximately 635 megawatts. Both Avista and Idaho Power are investing around $86 million over the next five years in this initiative.
In more recent developments, IDACORP reported a significant increase in diluted earnings per share to $1.71 in the second quarter of 2024, up from $1.35 in the same quarter of the previous year. Consequently, IDACORP has raised the lower end of its full-year earnings guidance to a range of $5.30 to $5.45 per diluted share. Analysts from Mizuho and BofA Securities maintain a Neutral stance on IDACORP, forecasting earnings per share for the fiscal years 2024, 2025, and 2026 to be $5.41, $5.76, and $6.04, respectively.
Additionally, IDACORP is investing in a 200-megawatt battery storage system and is in negotiations for additional resources for 2026. Despite increased operating expenses related to pension costs and wildfire mitigation, the company maintains strong system reliability. These recent developments highlight IDACORP's strategic moves in response to ongoing trends and challenges.
InvestingPro Insights
IDACORP's recent upgrade by Mizuho Securities is further supported by several positive indicators from InvestingPro data. The company's market cap stands at $5.51 billion, with a P/E ratio of 18.74, suggesting a reasonable valuation in line with Mizuho's assessment. IDACORP's revenue growth of 8.99% in Q2 2024 aligns with the company's strong performance noted in the article.
Two InvestingPro Tips particularly reinforce Mizuho's optimistic outlook. Firstly, IDACORP "has raised its dividend for 13 consecutive years," demonstrating consistent shareholder value creation. This is further emphasized by the fact that the company "has maintained dividend payments for 54 consecutive years," showcasing long-term financial stability. These dividend trends support the article's mention of IDACORP's robust growth prospects and strong management team.
The company's current dividend yield of 3.32% and dividend growth of 8.86% in the last twelve months as of Q2 2024 provide additional context to IDACORP's attractiveness as an investment. Moreover, with analysts predicting profitability this year and the stock trading near its 52-week high, the upgrade to Outperform seems well-founded.
For investors seeking more comprehensive analysis, InvestingPro offers 5 additional tips on IDACORP, providing a deeper understanding of the company's financial health and market position.
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