On Thursday, Jefferies, a global investment banking firm, initiated coverage on Public Service Enterprise Group Inc. (NYSE:PEG) with a Hold rating. The firm set a price target for the company's stock at $85.00, indicating a potential total shareholder return (TSR) of approximately 9%.
The decision to start with a Hold rating comes after considering the company's current position and future prospects. Jefferies acknowledges the potential for value creation should Public Service Enterprise Group successfully execute data centers at its nuclear facilities in New Jersey and Pennsylvania. The firm's outlook on the company remains constructive, based on these developments.
Jefferies' assessment also takes into account the recent performance of Public Service Enterprise Group's shares, which have shown relative strength. According to the firm, much of this strong performance has already been reflected in the current stock price. Therefore, the investment firm suggests that the "easy money" has already been made for investors.
Furthermore, Jefferies believes that the stock price has incorporated the anticipation of a favorable rate case outcome. The firm agrees with this positive expectation but notes that it is already factored into the valuation of the company's shares.
The price target of $85.00 is based on Jefferies' analysis and reflects their confidence in the company's ability to maintain its current trajectory and capitalize on its strategic initiatives. However, the Hold rating indicates a cautious stance on the stock's near-term growth potential, considering the recent share price appreciation and the expectations already priced in.
In other recent news, Public Service Enterprise Group (PSEG) has been upgraded to 'Buy' by Ladenburg Thalmann, following a significant rise in the Reliability Pricing Model (RPM) price from the recent PJM capacity auction results. The firm has also increased the price target for PSEG shares to $86.50, up from the previous target of $77.50.
These developments are expected to have a substantial impact on PSEG's earnings, with Ladenburg Thalmann raising their 2026 and 2027 earnings per share estimates for PSEG to $4.55 and $4.82, respectively.
On the earnings front, PSEG reported a decrease in net income for the second quarter of 2024, with earnings falling to $0.87 per share from $1.18 per share in the same quarter of the previous year. Despite this, the company maintains its full-year expectations and anticipates an increase in gross margin in the fourth quarter.
In other company news, PSEG is actively supporting New Jersey's economic development through the expansion of data centers and the state's clean energy initiatives. The company is focusing on clean energy assets and existing infrastructure, and expects growth in rate base from higher regulated investments.
PSEG plans to update its capital plan at the end of the year or the beginning of the next year, and remains confident in meeting its long-term compound annual growth forecast.
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