Promising Outlook for Sempra Energy: Legislative and Strategic Moves Drive Growth Potential

Analyst David Arcaro of Morgan Stanley maintained a Buy rating on Sempra Energy (SRE – Research Report), retaining the price target of $87.00.

David Arcaro has given his Buy rating due to a combination of factors that indicate a promising outlook for Sempra Energy. One of the key reasons is the potential for legislative improvements in Texas, particularly the “universal tracker” bill, which could streamline regulatory processes and enhance earnings per share starting in 2025. This legislative change, if enacted, would support Sempra’s substantial capital expenditure plans and reduce regulatory delays, providing a favorable environment for growth.
Additionally, Arcaro highlights significant capital expenditure opportunities in Texas, with transmission projects potentially totaling $35 billion. Sempra is expected to play a significant role in this expansion, with only a fraction of this investment currently included in their five-year plan, indicating further upside potential. Furthermore, the intended sale of Sempra Infrastructure is seen as a strategic move to address equity needs, potentially enhancing earnings and credit profiles, thus positioning the company well for future capital expenditure increases.

According to TipRanks, Arcaro is a 5-star analyst with an average return of 11.3% and a 56.09% success rate. Arcaro covers the Utilities sector, focusing on stocks such as Vistra Energy, Talen Energy Corp, and Centerpoint Energy.

In another report released on May 12, Evercore ISI also maintained a Buy rating on the stock with a $89.00 price target.