Xcel Energy cut at JPM, Wolfe after 'disappointing' Minnesota rate case outcome
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Xcel Energy (NASDAQ:XEL) -0.6% in Friday's trading after the stock was stung by two analyst downgrades, to Neutral from Overweight with a $68 price target, down from $79, at J.P. Morgan and to Peer Perform from Outperform at Wolfe Research.
Minnesota's Public Utilities Commission this week approved new electric rates for Northern States Power Minnesota at a 9.25% return on equity, which JPM's Jeremy Tonet said was a disappointing outcome relative to others in the state and reasonable assumptions amid higher interest rates.
Xcel (XEL) remains an "attractive regulated story with exposure to energy transition themes across generation and transmission," but Tonet noted the stock carries a top 13.5%-plus P/E premium across JPM's regulated coverage, "which leaves little room for the regulatory risk now highlighted by the commission's order."
Tonet expects the Minnesota rate outcome and heightened market attention on the Colorado electric rate case will weigh on Xcel (XEL) for now.
In its separate downgrade, Wolfe also noted the lower than expected Minnesota ROE outcome and concerns about the Colorado rate case likely to be determined by mid-June.
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