On Thursday, Evercore ISI initiated coverage on PNM Resources (NYSE:PNM), issuing an In Line rating and setting a price target of $38.00 for the utility company. The firm cited a mix of challenges and opportunities that influenced their valuation, including concerns about the company's balance sheet and potential financing risks.
PNM Resources, which operates in New Mexico and Texas, was noted to have jurisdictional risk in New Mexico and potential wildfire concerns. Evercore ISI pointed out that these factors merit a 10% discount multiple on their 2026 earnings per share (EPS) estimate of $3.00/share for PNM Resources.
In contrast, the firm acknowledged that there are investment opportunities that could positively impact the company's performance. The Texas jurisdiction, where PNM Resources also operates, was described as constructive, indicating a more favorable environment for the company's investments in that area.
The analyst's statement highlighted the balance between the risks and opportunities facing PNM Resources. "These risks are partially offset by investment upside in a constructive Texas jurisdiction," the analyst noted, reflecting a nuanced view of the utility provider's prospects.
InvestingPro Insights
As PNM Resources (NYSE:PNM) continues to navigate the challenges and opportunities within its operating regions, recent data and analysis from InvestingPro provide additional context for investors. With a market capitalization of $3.3 billion, PNM's financial health and growth prospects are crucial for understanding its current valuation. Notably, the company has raised its dividend for 12 consecutive years, a testament to its commitment to returning value to shareholders. This is particularly relevant given that PNM is trading at a high earnings multiple of 40.12, which suggests that investors have high expectations for the company's future earnings potential.
An InvestingPro Tip highlights that PNM has been maintaining dividend payments for 29 consecutive years, reinforcing its reputation as a reliable dividend payer. Moreover, the company's dividend yield stands at a robust 4.23%, offering an attractive income stream for investors. Analysts have also revised their earnings upwards for the upcoming period, indicating a positive outlook on the company's profitability. These insights may be especially valuable to investors considering Evercore ISI's recent In Line rating and the identified risks and opportunities.
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