AES’s price targets
Wall Street analysts have given AES (AES) an estimated median price target of $13. It implies a possible upside of 3% in the next year. AES was trading at $12.70 as of July 25, 2016.
Of the 13 analysts tracking AES, seven recommend it as a “buy,” while six recommend it as a “hold.” None of the analysts had a “sell” recommendation on the stock as of July 26, 2016.
According to analysts, utility giant NextEra Energy (NEE) has the potential to rise 3% in the next year. NEE has a target price of $133 compared to its current price of $129.20.
Duke Energy (DUK) is expected to fall by 5%. It has a target price of $82.20 and is currently trading at $86.70.
Outlook for AES
AES has been under pressure for the past few quarters due to currency headwinds. This is mirrored in its earnings. AES’s presence in 17 countries greatly exposes it to currency risk. No other US utility is as internationally diversified as AES.
To streamline its business risk profile, AES has been reducing its global operations. In the last five years, it has exited ten countries, which seems to have positively impacted its earnings.
An uptick in wholesale power prices could help AES to some extent. However, expected interest rate hikes in the United States this year may affect utilities negatively. If the US dollar continues to remain strong compared to emerging market currencies, AES’s earnings may be impacted.
On August 5, 2016, we’ll see how AES has managed its challenges in 2Q16.