Fortis, the Utilities sector company, was revisited by a Wall Street analyst on July 26. Analyst Ross Fowler from Bank of America Securities reiterated a Sell rating on the stock and has a C$64.00 price target.
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Ross Fowler has given his Sell rating due to a combination of factors impacting Fortis’s financial outlook. The stock is trading at a premium compared to its peers, despite having a less impressive earnings per share growth forecast. Key concerns include the outcomes of regulatory cases in Arizona and New York, as well as potential changes to ITC’s rate of return adder, which could significantly affect Fortis’s earnings growth.
Additionally, the bear case highlights challenges in financing capital expenditures without resorting to equity dilution or increased debt. The regulatory uncertainties in New York and the risk of losing the ITC rate of return adder further contribute to a cautious outlook. As a result, the expected earnings growth rate is lower than the consensus, leading to the reaffirmation of an Underperform rating, given the stock’s current premium valuation amidst these headwinds.
In another report released on July 14, J.P. Morgan also maintained a Sell rating on the stock with a C$63.00 price target.