According to Wall Street analysts’ estimates, CenterPoint Energy (CNP) has a one-year median price target of $24.58 compared to its current market price of $22.71. This implies a possible downside of 8.2%. Of the 16 analysts tracking CenterPoint Energy, 13 have recommended a “hold,” and three have recommended a “buy.” None of the analysts have recommended a “sell” as of August 9, 2016.
For its peers, analysts gave DTE Energy (DTE) a one-year price target of $102.30. That implies an estimated upside of ~8%, considering its current market price of $95. Eversource Energy (ES) has an estimated upside of 8% with a price target of $61.33 against its current market price of $56.77.
CenterPoint Energy’s 55.4% stake in Enable Midstream Partners (ENBL) weakened its financial performance. CNP is considering a sale or a spin-off of its ENBL stake. The company targets annual earnings growth of 4%–6% for the next few years, which is expected to be mainly achieved by its utility segments. CNP’s rate base is projected to grow by 6% annually, lower than the previous estimate of ~9%. The annual rate base target was lowered due to lower budget and extension of bonus depreciation.
CenterPoint Energy’s yield is one of the highest in the US utility space. It’s currently trading at a yield of 4.5% while the industry average is near 3.9%. Utilities might not rally further as the rate hike may weigh on them, but healthier dividends from such utilities can continue to please conservative investors.