Hybrid utility stocks are currently offering very attractive potential upsides compared to utilities at large. According to Wall Street analysts, Exelon (EXC) currently offers an upside potential of more than 7%. It has a price target of $39.47 against its current market price of $36.81.
Importantly, analysts seem to be positive on Exelon. Among 22 analysts tracking Exelon, four recommend it as a “strong buy,” while nine recommend it as a “buy.” Eight analysts recommend it as a “hold.” None of the analysts recommended a “sell” for the stock as of June 22, 2017.
Peer FirstEnergy (FE) currently offers an upside potential of nearly 14% against its market price of $29.52. It has a price target of $33.53.
Public Service Enterprise Group (PEG) has a price target of $47.13 against its current market price of $44.08, which implies an upside potential of 7%.
As we already discussed, lower natural gas prices influenced wholesale prices, which in turn hampered hybrid utilities’ earnings. The interim revival in natural gas prices was also unable to uplift wholesale power prices. Consequently, higher electricity demand might now be the only aspect that could fortify utilities’ earnings. However, due to various energy efficiency initiatives, a significant increase in power demand currently seems a bit unlikely.