On Friday, UBS resumed coverage on Ameren Corp . (NYSE:AEE), upgrading the utility company's stock to a Buy rating from a previous Neutral stance. The firm has also raised the price target to $87.00 from the former target of $81.00. The revision comes after a period of notable underperformance for Ameren's shares, which have lagged behind their peers by more than 16% since December 1, 2023.
The analyst from UBS noted that the underperformance was largely due to the impact of a difficult regulatory decision in Illinois in December last year. This event has since been factored into Ameren's stock price, which is currently trading at a 5% discount based on its projected 2026 earnings per share (EPS).
Ameren's stock trajectory has been influenced by the regulatory environment, which created uncertainty and affected investor sentiment. The updated assessment by UBS suggests a change in outlook, indicating a more favorable view of the company's future performance.
The price target adjustment to $87.00 reflects the firm's confidence in Ameren's potential to rebound from its recent setbacks. Ameren's current position, trading at a discount, presents what UBS sees as an attractive entry point for investors.
The coverage resumption and subsequent upgrade by UBS provide a fresh perspective on Ameren's stock, offering an updated valuation and a signal of the company's prospects in light of past challenges and future earnings expectations.
In other recent news, Ameren Corporation (NYSE:AEE) has been the subject of several analyst notes and released its first-quarter earnings report. Barclays (LON:BARC) upgraded Ameren to Overweight, citing the company's ability to achieve its long-term earnings per share growth rate and factors such as potential positive outcomes from a rehearing for the electric distribution segment in Illinois.
Conversely, Goldman Sachs (NYSE:GS) reduced its price target due to ongoing regulatory uncertainties, despite Ameren's active efforts to seek a rehearing for the rate case order and awaiting approvals for a revised Grid Plan.
BMO Capital Markets increased its price target for Ameren, maintaining an Outperform rating. The decision followed Ameren's first-quarter earnings report, which showed earnings per share of $0.98, slightly lower than the previous year. Despite this, the company reaffirmed its full-year 2024 guidance and five-year capital plan, which is expected to drive significant growth.
These developments come on the back of Ameren's first-quarter 2024 earnings report. The company reported earnings of $0.98 per share and remains on track to meet its 2024 earnings guidance. Ameren is making substantial investments to improve service reliability and efficiency and expects a compound annual earnings growth rate of 6% to 8% through 2028.
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