On Tuesday, BofA Securities adjusted its price target for Pinnacle West Capital (NYSE:PNW) shares, listed on the New York Stock Exchange under the ticker NYSE:PNW, to $77.00 from the previous target of $80.00. The firm maintained its Buy rating on the utility company. The revision in the price target was attributed to a reduction in the group average price-to-earnings (P/E) multiple to 13.6x, compared to the earlier 14.0x.
The analyst at BofA Securities stated that the forecast for Pinnacle West Capital's earnings per share (EPS) for fiscal years 2024 to 2026 remains unchanged, with estimates standing at $4.82, $4.99, and $5.59 per share, respectively. The investment firm's valuation methodology for the company has not been altered despite the adjustment in the price target.
The first-quarter EPS estimate for fiscal year 2024 has been set at $0.03 per share, showing an improvement from the -$0.03 per share reported in the same quarter of the previous year. The analyst highlighted that the fundamental investment thesis for Pinnacle West Capital remains the same, with the potential for regulatory improvements in Arizona anticipated to narrow the gap between the company's earned and its allowed Return on Equity (ROE).
BofA Securities' outlook for Pinnacle West Capital suggests a stable view of the company's financial performance and prospects, despite the slight adjustment to the price target reflecting market valuation trends. The utility company's stock continues to hold a Buy rating, with expectations of regulatory developments positively impacting its financial metrics in the near future.
InvestingPro Insights
As BofA Securities maintains a positive stance on Pinnacle West Capital (NYSE:PNW), recent data from InvestingPro provides a detailed financial perspective on the company. With a market capitalization of $8.88 billion, Pinnacle West Capital is trading at a P/E ratio of 16.24, which is above the group average P/E multiple cited by BofA Securities. Despite this, the company has a history of returning value to shareholders, having raised its dividend for 12 consecutive years and maintaining dividend payments for 32 consecutive years. The dividend yield stands at a robust 4.75%, reflecting the company's commitment to shareholder returns.
InvestingPro Tips indicate that while Pinnacle West operates with a significant debt burden, analysts predict it will remain profitable this year, as evidenced by its profitability over the last twelve months. However, it's worth noting that 3 analysts have revised their earnings downwards for the upcoming period, which could be a point of consideration for investors. Moreover, the company's short-term obligations exceed its liquid assets, which may require careful financial management.
For readers seeking a comprehensive analysis, there are additional InvestingPro Tips available for Pinnacle West Capital, offering deeper insights into the company's financial health and market potential. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription for more in-depth analysis and data.
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