On Thursday, Exelon Corporation (NASDAQ:EXC) experienced a setback as its shares fell by 4%, underperforming the Utilities Sector, which saw a lesser decline of 0.7%. This drop came in the wake of a final order by the Maryland Public Service Commission (PSC) in the rate case of Exelon's subsidiary, PEPCo.
The Maryland PSC rejected a proposed three-year rate hike, instead granting a $45 million one-year rate increase. The commission has decided to carry out a comprehensive evaluation of the multiyear rate plan framework before it will consider approving any further multiyear requests.
The Maryland PSC's decision is not the first regulatory challenge Exelon has faced. In the fourth quarter of 2023, the company encountered a similar issue in Illinois. Exelon is also navigating potential risks with its multiyear rate application in Washington D.C. and a forthcoming review of PEPCo's costs, which could further impact the company's stock performance.
Despite these hurdles, KeyBanc maintains a Sector Weight rating on Exelon, indicating a neutral outlook on the stock. The firm acknowledges the regulatory challenges but does not foresee these issues threatening Exelon's long-term growth rate, which is projected to be between 5-7%.
The rating suggests that KeyBanc views Exelon's stock as aligned with the overall sector performance expectations, without showing signs of significant overperformance or underperformance at this time.
In conclusion, Exelon Corporation is navigating through a challenging regulatory landscape, which has recently resulted in a less favorable outcome in Maryland. While these developments have led to a decline in the company's share price, the outlook on its long-term growth remains stable according to KeyBanc's assessment.
In other recent news, Exelon Corporation's first-quarter earnings of 2024 were in the spotlight, with the company reporting earnings of $0.66 per share on a GAAP basis and $0.68 per share on a non-GAAP basis.
Despite softer earnings influenced by mild weather and increased storm activity, Exelon remains on track to meet its annual financial expectations. The company has reaffirmed its long-term guidance of 5-7% annualized operating earnings growth, with an anticipated total return of approximately 4% according to Goldman Sachs (NYSE:GS).
In terms of analyst ratings, Goldman Sachs maintained its sell rating on Exelon shares, with a price target of $38.00. Contrarily, BMO Capital offered a more positive outlook, reiterating its Outperform rating and boosting the price target to $42.00. Both firms cited recent developments in the Illinois regulatory landscape and the rate case process for ComEd, Exelon's largest subsidiary, as factors influencing their ratings.
In other developments, Exelon has made significant strides on the regulatory front, concluding ComEd's rehearing process and filing updated grid and rate plans. The company is also seeing increased data center inquiries within its PECO territory, aligning with the broader industry's emphasis on data center expansion due to increasing digitalization. These are some of the recent highlights from Exelon Corporation.
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