Hold Rating on Northwest Natural: Improving Growth and Diversification Already Priced Into Shares

TD Cowen analyst Shelby Tucker maintained a Hold rating on Northwest Gas today and set a price target of $58.00.

Shelby Tucker has given his Hold rating due to a combination of factors that balance Northwest Natural’s improving growth profile with a valuation that already reflects much of this upside. The company is shifting from a slow-growing regional utility toward a more diversified platform, adding high-growth Texas gas assets and water utilities that should lift long-term EPS growth, especially if the MX3 storage expansion proceeds as planned.

At the same time, Tucker notes that the shares have recently outperformed, and his sum-of-the-parts analysis suggests the current price already embeds a premium for constructive regulation and Texas-driven opportunities. While multi-year rate cases in Oregon and Washington and rising Texas capex support more predictable earnings, first-mover regulatory risk and a still gas-heavy earnings mix temper the upside, leading him to recommend holding rather than buying at present levels.

Based on the recent corporate insider activity of 61 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 NWN in relation to earlier this year.