UBS analyst William Appicelli maintained a Hold rating on PPL yesterday and set a price target of $39.00.
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William Appicelli has given his Hold rating due to a combination of factors surrounding PPL’s recent developments and financial outlook. The announced rate stipulation in Kentucky is a positive step, as it increases the allowed return on equity to 9.9% from the current 9.43%, which could potentially enhance PPL’s earnings per share by $0.05 based on the estimated 2027 rate base. However, this stipulation also includes commitments such as not requesting another base rate increase before August 2028, which may limit PPL’s flexibility in the near term.
Despite the constructive nature of the Kentucky stipulation, PPL’s stock is trading at a 1% premium compared to the utility group, based on UBS’s 2027 earnings estimate of $2.07 per share, which does not factor in the ROE improvement. Additionally, there are revenue disallowances and other financial adjustments that may impact PPL’s earnings. These elements, along with upcoming milestones such as the Pennsylvania rate case and the generation joint venture with Blackstone, contribute to a cautious outlook, justifying the Hold rating.
In another report released on October 14, Barclays also maintained a Hold rating on the stock with a $40.00 price target.