On Wednesday, BMO Capital Markets adjusted its outlook on Sempra Energy (NYSE: NYSE:SRE) shares, reducing the price target to $84 from $86, while reaffirming an Outperform rating on the company's stock.
The revision follows a routine quarterly assessment, which led to a change in Sempra Energy's second-quarter 2024 earnings estimate to $0.89, down from $0.94 in the same quarter of the previous year.
The analyst from BMO Capital attributes the anticipated year-over-year earnings decline to the lack of tax benefits and regulatory awards at Southern California Gas (SoCalGas) and a net year-on-year lower contribution from Sempra Infrastructure Partners (SIP). These factors are expected to be the primary drivers behind the reduced earnings projection for the upcoming quarter.
During the upcoming earnings call, the focus is expected to be on Sempra Energy's California General Rate Cases (CA GRCs). The Administrative Law Judge (ALJ) is anticipated to make a Proposed Decision (PD) in the summer.
Additionally, attention will be drawn to the recent Heads of Agreement (HOA) with Saudi Aramco (TADAWUL:2222) concerning the Port Arthur Phase 2 project and any updates regarding the Oncor Strategic Realignment Proceeding (SRP).
The analyst stated that the price target adjustment reflects a mark-to-market (MTM) of peer group multiples. Despite the reduced price target, the Outperform rating suggests that BMO Capital continues to see Sempra Energy as a favorable investment relative to its peers.
In other recent news, Sempra announced significant strides in its financial performance and strategic investments. The energy giant recently declared a quarterly dividend of $0.62 per share, demonstrating its stable financial position and commitment to shareholder value.
Sempra reported an adjusted earnings per share (EPS) of $1.34 for the first quarter of 2024, reaffirming its full-year 2024 adjusted EPS guidance range of $4.60 to $4.90.
BMO Capital Markets upgraded its price target for Sempra from $84 to $86, maintaining an Outperform rating on the stock. The firm's projections for Sempra's earnings in the coming years remain consistent, with expectations set at $4.90 for 2024, $5.28 for 2025, and $5.63 for 2026.
Sempra also welcomed Jennifer M. Kirk to its Board of Directors, a strategic move that brings financial expertise to the board's oversight functions. Kirk, recognized as an audit committee financial expert by SEC rules, will also serve on the Audit Committee and Safety, Sustainability, and Technology Committee.
Lastly, Sempra outlined growth opportunities and infrastructure investment plans through its subsidiary Oncor in Texas. Oncor is preparing to scale up investments to meet the anticipated doubling of peak electricity load by 2030 in the Electric Reliability Council of Texas (ERCOT) region.
The company also announced a $3 billion system resiliency plan to improve grid reliability and mitigate wildfire risks. These recent developments suggest that Sempra is well-positioned to capitalize on opportunities within the energy sector.
InvestingPro Insights
In light of BMO Capital Markets' recent price target adjustment for Sempra Energy (NYSE:SRE), real-time data and insights from InvestingPro provide additional context for investors. Sempra Energy's market capitalization stands at a robust $47.83 billion, reflecting its significant presence in the utility sector. The company's P/E ratio is currently at 16.64, which aligns with industry averages, indicating that the stock is neither undervalued nor overvalued based on earnings. Additionally, Sempra has demonstrated a commitment to shareholder returns, boasting a dividend yield of 3.28% as of the latest data, which is attractive to income-focused investors.
InvestingPro Tips highlight that Sempra Energy has raised its dividend for 13 consecutive years and has maintained dividend payments for 27 consecutive years, underlining the company’s reliability in returning value to shareholders. Moreover, the stock generally trades with low price volatility, which might appeal to conservative investors seeking stability in their portfolio.
For readers interested in a deeper analysis, there are additional InvestingPro Tips available for Sempra Energy, which can be explored at https://www.investing.com/pro/SRE. Investors can also take advantage of a special offer using the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, providing access to exclusive insights and data to inform investment decisions.
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