Black Hills Faces Financial Challenges: Sell Rating Due to Limited Growth Prospects and Rising Costs

Bank of America Securities analyst Ross Fowler maintained a Sell rating on Black Hills (BKH – Research Report) today and set a price target of $59.00.

Ross Fowler has given his Sell rating due to a combination of factors affecting Black Hills’ financial performance. The company’s first-quarter earnings per share (EPS) for 2025 fell short of both consensus and Bank of America’s estimates, indicating potential challenges in meeting market expectations. Despite reaffirming its annual EPS guidance, Black Hills’ long-term growth prospects appear limited, with a projected EPS growth rate of only 4%-6%, which is contingent on successful regulatory execution across various jurisdictions.
Higher operating and maintenance (O&M) expenses, along with increased interest costs, have negatively impacted the company’s year-over-year performance. While there was an increase in operating income for the Gas Utilities segment due to favorable weather and new rates, the Electric Utilities segment experienced a decline, primarily due to unplanned outages and rising O&M expenses. Additionally, the company’s current stock price exceeds the price objective set by Bank of America, suggesting limited upside potential, which supports the Sell recommendation.