On Tuesday, Raymond (NSE:RYMD) James adjusted its outlook on Fortis Inc . (TSX:FTS:CN) (NYSE: FTS), increasing the company's price target from Cdn$61.00 to Cdn$62.50. The firm maintained a Market Perform rating on the utility company's shares. According to InvestingPro data, Fortis (NYSE:FTS), with its $22.4 billion market cap, is currently trading near its 52-week high with a P/E ratio of 19.6x.
Fortis, known for its diversified North American operations and consistent rate base growth, received a positive evaluation from Raymond James. The analyst, David Quezada, highlighted the company's strong performance in 2024 as evidence of its industry-leading diversification. He also noted the growth potential linked to the company's involvement in sustainable investment areas. InvestingPro analysis reveals the company has maintained dividend payments for 38 consecutive years, currently offering a 2.7% yield.
The firm's constructive stance on Fortis is influenced by several key factors. The rate base growth of over 6% is a significant aspect of the company's appeal, suggesting a steady increase in the value of the company's regulated assets. This growth trajectory is supported by Fortis' strategic investments across different regions and sectors. With an InvestingPro Financial Health Score rated as 'FAIR' and low price volatility, the company demonstrates stability in its operations. Get access to 8 more exclusive InvestingPro Tips and comprehensive analysis through the Pro Research Report.
Despite the favorable outlook for the company's long-term growth, Raymond James also took into account Fortis' recent stock performance. The analyst indicated that the current stock valuation already reflects the positive attributes of the company, which justifies the decision to maintain a Market Perform rating.
Fortis' exposure to durable investment themes presents additional opportunities for growth. These themes are likely to remain relevant and drive investment, potentially leading to an upside for the company.
In summary, Raymond James' updated price target for Fortis reflects a balance between the company's strong fundamentals and its recent market performance. The Market Perform rating suggests that while the firm acknowledges the positive aspects of Fortis' business model and growth prospects, it also considers the stock to be fairly valued at present.
In other recent news, Fortis Inc . reported a robust Q4 performance, surpassing analyst estimates. The North American utility company's adjusted earnings per share for the fourth quarter of 2024 stood at $0.83, exceeding the analyst consensus estimate of $0.58 by $0.25, which is a 25.8% increase from the same period last year. The company's net earnings for the quarter rose to $396 million, primarily due to rate base growth across its utilities and new customer rates at Central Hudson (NYSE:HUD) effective from July 1, 2024.
For the full year 2024, Fortis reported adjusted net earnings of $1.6 billion, or $3.28 per share, a 6% increase from $3.09 per share in 2023. The company's capital expenditures for the year amounted to $5.2 billion, resulting in a 6% annual rate base growth.
These are all recent developments in the company's performance. Fortis has also reaffirmed its five-year $26 billion capital plan through 2029, which is expected to drive a compound annual growth rate of 6.5% in its rate base. Additionally, the company has maintained its annual dividend growth guidance of 4-6% through 2029.
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