How Analysts View PG&E’s Recent Stock Changes
In this series, we’re analyzing Wall Street analysts’ favorite utility stocks based on their “buy” ratings. PG&E (PCG), the largest utility by market capitalization in California, has a mean price target of $71.09 against its current market price of $69.20. That indicates an implied gain of nearly 3.0% going forward.
Among the 15 analysts tracking PG&E, two have recommended a “strong buy” for the stock, and eight have recommended a “buy.” Five analysts have rated it a “hold,” and none of them have recommended a “sell.”
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Peer price targets
PG&E’s peer utility Edison International (EIX) has a gain potential of 8.0% based on analysts’ mean price target of $83.90. It’s currently trading at $77.85.
Sempra Energy (SRE) has a mean price target of $122.64 against its current market price of $114.56. That indicates an implied gain of more than 7.0%.
Sempra’s growth prospects improved after its agreement to buy Oncor last month. You can read more about it in Big Move: Sempra Energy Agrees to Buy Oncor.
Except for Sempra Energy (SRE), utilities in California seem to be trading at a noteworthy discount compared to the peer average of 11.0x. PG&E (PCG) seems to be trading at a fair discount. Its EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) valuation multiple is 9.0x. Its five-year historical average multiple is near 9.0x. Sempra Energy is trading at a valuation multiple of 13.0x, and Edison International is at a valuation ratio of 9.5x.
PG&E and Edison International have PE (price-to-earnings) multiples near 19.0x. Sempra Energy has a PE ratio of 17.5x.
For more information on the upside potentials of utilities (XLU), be sure to read These SPX Utilities Could Gain You More than 10% from Here.