In a report released today, Ross Fowler from Bank of America Securities reiterated a Buy rating on Sempra Energy, with a price target of $99.00.
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Ross Fowler has given his Buy rating due to a combination of factors including Sempra Energy’s strategic sale of a 45% stake in Sempra Infrastructure Partners to KKR for $10 billion. This transaction is anticipated to enhance Sempra’s financial position by reducing debt and enabling share buybacks, which are expected to contribute positively to earnings per share starting in 2027. The deal is projected to close between the second and third quarters of 2026, and the anticipated accretion to earnings is considered conservative, with potential for higher returns due to favorable conditions in Oncor’s capital plans.
Additionally, Sempra’s subsidiary, Oncor, is undergoing a rate case in Texas that could lead to increased authorized equity layers and return on equity, given the current economic environment and state incentives for energy generation. The introduction of a new unified tracker mechanism and Oncor’s involvement in significant transmission projects further bolster the growth outlook. These developments, combined with the potential for upward revisions to consensus earnings estimates, support the Buy rating with a price objective of $99, implying a potential total return of over 10%.
In another report released yesterday, Evercore ISI also initiated coverage with a Buy rating on the stock with a $105.00 price target.