On Tuesday, BofA Securities updated its stance on FirstEnergy Corp. (NYSE:FE), increasing the price target to $43 from the previous $40, while continuing to recommend an Underperform rating for the stock. The revision reflects changes in the group average price-to-earnings (P/E) multiple and earnings estimates.
The firm has adjusted its earnings per share (EPS) estimates for FirstEnergy for the years 2024 through 2026 to $2.77, $3.39, and $3.69, respectively. These figures are a slight modification from the previous estimates of $2.86 for 2024, $3.40 for 2025, and $3.64 for 2026. According to the analyst, these updated estimates are within the company's provided guidance ranges and take into account updated financial results.
For the first quarter of 2024, BofA Securities anticipates an EPS of $0.59 per share for FirstEnergy. This quarterly estimate is part of the broader financial picture that the securities firm has used to inform their analysis and price target adjustment.
The firm's continued Underperform rating on FirstEnergy is attributed to the significant challenges associated with the Central Virginia Offshore Wind project (CVOW). The analyst notes that the size and execution demands of this project present considerable hurdles for the energy company.
The updated price target and EPS estimates are intended to align with the current market conditions and the firm's financial performance. BofA Securities' assessment indicates cautiousness towards FirstEnergy's stock, suggesting that the company's projected financial trajectory and project execution risks are factors that investors might want to consider.
InvestingPro Insights
FirstEnergy Corp. (NYSE:FE) is currently navigating the market with a notable debt burden and faces liquidity challenges, as its short-term obligations surpass its liquid assets. Despite these concerns, the company is trading at a low P/E ratio of 19.1 based on the last twelve months as of Q4 2023, which may appeal to value-oriented investors considering near-term earnings growth. Additionally, FirstEnergy has demonstrated resilience by maintaining dividend payments for 27 consecutive years, and analysts remain optimistic about its profitability for the year. With a dividend yield of 4.45% as of early 2024 and a history of dividend growth, including an 8.97% increase in the last twelve months of 2023, the company may attract income-focused shareholders.
Investors considering FirstEnergy will find that the stock generally exhibits low price volatility, which could be a stabilizing factor in a diversified portfolio. Moreover, the company's commitment to dividends, coupled with a fair value estimation by analysts at $41, suggests potential for upside from the previous close price of $38.21. For those seeking more in-depth analysis, InvestingPro offers additional insights and metrics, including 6 more InvestingPro Tips for FirstEnergy. To take advantage of these expert tips and enhance your investment strategy, use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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