Eversource Energy: Hold Rating Amid Regulatory Developments and Valuation Concerns

Eversource Energy (ES – Research Report), the Utilities sector company, was revisited by a Wall Street analyst yesterday. Analyst Ross Fowler from Bank of America Securities maintained a Hold rating on the stock and has a $62.00 price target.

Ross Fowler has given his Hold rating due to a combination of factors influencing Eversource Energy’s financial and regulatory environment. The passage of Senate Bill 4 (SB4) in Connecticut is a significant development, as it authorizes bonds to shift utility costs from customer bills to the state’s balance sheet, which could improve the company’s financial metrics. However, despite these positive changes, the current stock price is slightly above the price objective, suggesting limited upside potential.
Additionally, the restructuring of the Public Utilities Regulatory Authority (PURA) and the expected appointment of additional commissioners may streamline future rate proceedings, potentially benefiting Eversource. The bill’s provisions for storm cost securitization and the reduction of public benefit charges are expected to support the company’s balance sheet and lower residential bills. While these factors are favorable, they are balanced by the current valuation, leading to a Hold rating.

ES’s price has also changed slightly for the past six months – from $61.790 to $64.660, which is a 4.64% increase.