On Wednesday, BMO Capital Markets maintained a positive stance on shares of Ameren Corp . (NYSE: NYSE:AEE), raising its price target to $98.00 from the previous $93.00, while keeping an Outperform rating on the stock. The adjustment follows recent developments in a Missouri (MO) rate case, where after market hours on Tuesday, Staff submitted testimony that suggested a revenue increase close to Ameren's request.
The Staff's proposed revenue increase of approximately $398 million is in line with Ameren's own request of about $446 million. The recommendation by the Staff is based on a return on equity (ROE) of 9.74% and an equity ratio of 51.8%. These figures are subject to change as true-ups are expected to be submitted between late January and mid-February.
BMO Capital views the initial testimony and the proposed rate of return parameters as a constructive beginning for Ameren. The firm's move to raise the price target reflects this optimism. The analyst noted the company's market-to-model (MTM) and sum-of-the-parts (SOTP) valuation as the basis for the updated target price.
Ameren's case will continue to develop over the coming months, with the possibility of adjustments based on further submissions and true-ups. BMO Capital's current assessment, however, signals confidence in Ameren's financial outlook and the potential for the company to achieve favorable outcomes in the rate case proceedings.
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