DTE Energy: Hold Rating Maintained Amid Mixed Regulatory Signals and IRM Support

Analyst James Thalacker of BMO Capital maintained a Hold rating on DTE Energy, boosting the price target to $144.00.

James Thalacker has given his Hold rating due to a combination of factors influencing DTE Energy’s current market position. The recent staff testimony in DTE’s electric rate case initially caused a negative market reaction, but Thalacker views the staff’s position as more favorable than it might appear at first glance. The staff’s support for extending the Infrastructure Recovery Mechanism (IRM) at increasing levels is seen as a positive development, despite the recommended Return on Equity (ROE) being slightly lower than the current authorization.
While the staff’s recommended revenue deficiency is significantly lower than DTE’s request, it is considered a reasonable starting point when adjusted for the company’s higher equity layer and ROE request. The staff’s recommendations include adjustments to operating and maintenance costs, depreciation and amortization, and other financial metrics, which contribute to the difference between their position and DTE’s request. Despite these adjustments, the staff’s support for extending the IRM and the reasonable starting position for negotiations are seen as constructive. Consequently, Thalacker maintains a Hold rating, expecting DTE shares to trade within a narrow range as the company works towards achieving its full-year guidance and regulatory outcomes.

Based on the recent corporate insider activity of 41 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of DTE in relation to earlier this year.