On Tuesday, Mizuho Securities adjusted its outlook on shares of Consolidated Edison (NYSE:ED), increasing the utility company's price target to $95 from $93, while maintaining a neutral stance on the stock.
The revision follows the New York Public Service Commission (NYPSC) Staff's recommendation on Friday for a 9.5% return on equity (ROE) and a 48% equity layer for Consolidated Edison's subsidiary Orange & Rockland (O&R). Additionally, the Staff proposed a revenue reduction of $38 million for O&R's electric operations and $20 million for its gas operations.
Mizuho also adjusted its 2024 earnings estimates for Consolidated Edison, decreasing them by approximately $0.17 per share. This change is attributed to the disallowance of cost recovery related to overruns for the company's computer information system by Consolidated Edison Company of New York (CECONY). The firm anticipates that O&R will aim to settle with the NYPSC Staff in late third quarter of 2024.
The analyst from Mizuho highlighted that gas utilities in New York State have been reaching constructive settlements with the Staff and intervenors. It is expected that O&R's situation would follow a similar path.
Despite the adjustments, Mizuho sees a balanced risk-reward for Consolidated Edison's shares and has thus opted to retain a neutral rating while slightly lifting the price target based on the latest market multiples.
InvestingPro Insights
Consolidated Edison (NYSE:ED) has been a beacon of consistency for investors, with a remarkable track record of dividend reliability. As per InvestingPro Tips, the company has not only maintained but also raised its dividend for 49 consecutive years, underscoring a commitment to shareholder returns. This is particularly noteworthy as analysts have recently revised their earnings expectations downwards for the upcoming period, suggesting a cautious outlook on the company's near-term financial performance.
In terms of financial health, InvestingPro Data indicates a solid foundation with a market capitalization of 32.66B USD and a Price/Earnings (P/E) ratio standing at 18.04, which adjusts slightly to 17.92 when looking at the last twelve months as of Q1 2024. The company's revenue for the same period was 14.54B USD, although it experienced a decline of 9.2% in revenue growth. Despite this, the gross profit margin remained strong at 52.58%, reflecting the company's ability to maintain profitability.
For those considering an investment in Consolidated Edison, the InvestingPro platform offers additional insights and tips to help make informed decisions. For instance, while the stock trades with low price volatility, it's important to note that the net income is expected to drop this year. However, the company is still predicted to be profitable, having been profitable over the last twelve months. Investors seeking further guidance can find more tips on InvestingPro, and can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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