On Friday, Mizuho Securities adjusted its stance on Avista Corporation (NYSE:AVA), shifting the utility company's stock rating to 'Neutral' from 'Underperform.' Accompanying this change, the firm also increased Avista's price target to $36.00, up from the previous $32.00.
The adjustment comes as Mizuho sees a more balanced risk-reward scenario for Avista's shares. The firm acknowledges that there are limited factors that could further depress the stock's value. This outlook is partly based on Avista's ongoing rate case in Washington, which represents around 60% of the company's total rate base. The company's efforts to maintain a growth rate of 4-6% also contribute to this new assessment.
Mizuho highlighted that Avista has several opportunities to settle its rate case before staff and intervenor testimony, which could help mitigate risks associated with the regulatory process. This potential for a smoother resolution is seen as a positive influence on the stock's outlook.
The updated price target reflects the latest market multiples. Avista's shares are currently trading at approximately a 6% discount compared to the utility peer group based on 2026 estimated earnings. The new price target suggests a recognition of this valuation gap and a projection of Avista's market performance aligning closer with its industry counterparts.
InvestingPro Insights
In light of Mizuho Securities' recent update on Avista Corporation (NYSE:AVA), it's pertinent to note that Avista has a longstanding history of rewarding shareholders. According to InvestingPro Tips, the company has not only raised its dividend for 21 consecutive years but has also maintained dividend payments for an impressive 54 consecutive years. This is particularly noteworthy for investors seeking stable income, as Avista is currently trading at a low P/E ratio of 15.09, suggesting that it might offer a good value relative to its near-term earnings growth.
InvestingPro Data further underscores Avista's financial health with a robust gross profit margin of 57.45% over the last twelve months as of Q1 2024. Additionally, the company has experienced a significant revenue growth rate of 9.49% during the same period. For shareholders focused on returns, Avista's dividend yield stands at an attractive 5.16%, complemented by a dividend growth of 3.26%.
For readers interested in further analysis and additional InvestingPro Tips, consider exploring Avista on InvestingPro. There are 4 more tips available that could provide deeper insights into the company's performance and potential. And remember, by using the coupon code PRONEWS24, you can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, enhancing your investment research with valuable data and expert insights.
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