Xcel Energy cut at BMO on disappointing Colorado rate settlement
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Xcel Energy (NASDAQ:XEL) is little changed in Thursday's trading as BMO Capital downgraded the stock to Market Perform from Outperform with a $64 price target, trimmed from $69, to reflect the lower than expected terms of the Colorado regulatory settlement.
Following the recent electric order in Minnesota, if adopted, the proposed Colorado settlement would represent the second suboptimal regulatory outcome for XCEL (XEL) this month, BMO James Thalacker said, cutting his EPS estimates for 2023-25 to $3.36, $3.56 and $3.80, respectively, to reflect the terms of the Colorado settlement that was $35M lower than its forecast.
Thalacker noted Xcel's (XEL) Colorado and Minnesota utilities total just under 75% of 2023 consolidated rate base, and when adding the potential for escalating civil penalties associated with the Marshall fire, he believes the stock could see additional multiple compression from current levels.
"While we continue to have every confidence in management's ability to find cost and productivity offsets to help mitigate these recent outcomes, the cumulative impact of both regulatory outcomes likely truncates the upside in EPS many investors had expected," Thalacker wrote.
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