Sempra: Lawsuit-Driven Selloff Overdone Amid Strong Infrastructure Fundamentals and LNG Growth Supporting Buy Rating

BMO Capital analyst James Thalacker reiterated a Buy rating on Sempra Energy yesterday and set a price target of $100.00.

James Thalacker has given his Buy rating due to a combination of factors tied to both the recent share-price reaction and Sempra’s underlying fundamentals. He believes the sharp stock decline following the Eaton Fire lawsuit significantly overstates the likely financial impact on Sempra and its SoCalGas subsidiary, especially when considering the presence of numerous other cross-defendants and the overall damage pool. His analysis suggests that the market is effectively pricing in an improbably large share of the total estimated fire-related damages as Sempra’s responsibility, implying a level of liability he views as excessive relative to realistic outcomes. While he acknowledges that the legal process could drag on and create headline risk, he sees this as more of a valuation overhang than a fundamental impairment to the business.

At the same time, Thalacker highlights Sempra’s strong infrastructure platform in key Southern California and broader Southwest markets as a key support for the Buy rating. He expects above-average earnings and rate-base growth from its utility and infrastructure operations, underpinned by constructive regulatory frameworks and solid capital deployment. Additionally, he points to robust cash generation from Sempra’s LNG development activities as an important contributor to long-term earnings expansion and balance-sheet strength. In his view, these fundamentals, combined with the potential for valuation multiples to improve as regulatory milestones are achieved in California, justify maintaining a positive stance even after modestly trimming estimates and reducing the price target to $100.

In another report released today, Barclays also maintained a Buy rating on the stock with a $97.00 price target.

Based on the recent corporate insider activity of 66 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 SRE in relation to earlier this year.