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Most Analysts Recommend a ‘Buy’ on Exelon

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Outlook

Exelon (EXC) expects that its dismal load growth may continue in 2016. This could be partially offset by its customer base growth, as the growing economy may support customer additions in the near future. EXC plans to spend more on regulated operations to stabilize its earnings.

Exelon plans to spend $18 billion on capital projects in the next five years. According to the company’s management, by 2018, approximately 60% of its total earnings with Pepco Holdings (POM) will result from its regulated operations.

Exelon has initiated various cost-cutting projects that could save the company up to $350 million in the long run. For 1Q16, its management has provided operating earnings guidance in the range of $0.60–$0.70 per share. In 1Q15, Exelon earned $0.74 per share.

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Price targets

According to Wall Street analysts’ consensus estimates, Exelon has a one-year price target of $33.60 compared to its current market price of $31.60 as of February 4, 2016. This indicates a possible upside of nearly 6.4% in one year.

Of the 22 analysts tracking Exelon, nine recommend a “hold” while 13 recommend a “buy” on the stock. No analysts recommend a “sell” as of February 3.

Duke Energy (DUK) has a one-year estimated downside of ~3% according to analysts’ estimates. It has a price target of $76.40 against its current market price of $78.50. Utility giant NextEra Energy (NEE) has an estimated price target of $120.40. This amounts to a possible upside of 5%. NextEra Energy is currently trading at $114.70.

We may see higher price targets for utilities (FXU) going forward considering the slow pace of the Fed’s interest rate hike and the pickup in growth that was seen in January 2016.

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