Buy Recommendation for PEG Amid LIPA Contract Extension and Earnings Stability

Bank of America Securities analyst Ross Fowler has maintained their bullish stance on PEG stock, giving a Buy rating yesterday.

Ross Fowler’s rating is based on the recent developments involving the Long Island Power Authority (LIPA) and Public Service Enterprise Group (PEG). The LIPA Board decided to cancel the existing Request for Proposal (RFP) process and enter into negotiations to extend the current Operation Services Agreement (OSA) with PEG. This decision is significant because it ensures that PEG will continue to generate earnings from LIPA, which contributes approximately $0.05 to $0.06 per share to PEG’s earnings.
The extension of the OSA is expected to maintain PEG’s earnings stability, as the company will likely secure these earnings at least through the year 2026. Additionally, the decision to negotiate with PEG rather than accept the RFP committee’s recommendation of Quanta Services highlights the Board’s confidence in PEG’s operational capabilities. This confidence, coupled with the potential for a slight increase in earnings from the LIPA contract extension, supports the Buy rating with a price objective of $93.00 USD, compared to the current price of $77.71 USD.

In another report released yesterday, Morgan Stanley also maintained a Buy rating on the stock with a $101.00 price target.

PEG’s price has also changed moderately for the past six months – from $92.400 to $77.370, which is a -16.27% drop .