Black Hills Corp. Poised for Outperformance: Buy Rating Backed by Strong Fundamentals and Growth Prospects

Black Hills (BKH) has received a new Buy rating, initiated by BMO Capital analyst, James Thalacker.

James Thalacker has given his Buy rating due to a combination of factors that suggest Black Hills Corp. (BKH) is poised for outperformance. The stock is currently trading at a significant discount compared to its peers, approximately 20-21%, which Thalacker believes is unwarranted given the company’s strong fundamentals. Key attributes include an appealing valuation, a growth strategy focused on regulated operations, and a robust balance sheet. Additionally, Black Hills is expected to experience above-average rate base growth and has potential upside from capital spending, coupled with a relatively light regulatory calendar.
Despite some challenges such as a larger financing drag and a long-term EPS growth rate that trails the industry average, Thalacker is optimistic about the company’s prospects. The management’s growth plan is seen as highly achievable, particularly with the upcoming 500MW data center ramp from Meta, which is expected to boost EPS growth. While immediate catalysts for revaluation are uncertain, continued execution and potential announcements in generation and transmission could enhance visibility and align growth expectations with industry norms. This, in turn, could drive a re-rating of the stock and support Thalacker’s target price of $68.

Thalacker covers the Utilities sector, focusing on stocks such as Centerpoint Energy, Duke Energy, and Ameren. According to TipRanks, Thalacker has an average return of 13.4% and a 65.77% success rate on recommended stocks.