DTE Energy (NYSE:DTE) is upgrading its natural gas infrastructure. The company develops and administers energy-related businesses and services in the United States and Canada through its subsidiaries. DTE Electric Company and DTE Gas Company are the company’s two major regulated subsidiaries.
To maintain and enhance the dependability of its electric utility infrastructure, DTE Energy pursues a rigorous capital investment program. It has been rapidly increasing its investments in renewable power assets in order to capitalize on the burgeoning clean energy industry.
The diversified energy company’s stock has risen around 11% in the past year and over 14% so far this year.
MPSC Approval – A Tailwind
DTE has been working hard to upgrade its infrastructure in order to cut down on greenhouse gas emissions. It has a long history of producing safe, dependable, and environmentally friendly energy.
Recently, DTE acquired another permit relating to infrastructure upgrading. The permit will assist the firm in cutting greenhouse gas emissions to the equivalent of removing 100,000 automobiles from the road by 2035.
The Michigan Public Service Commission (MPSC) will provide the firm with $84 million to update its natural gas infrastructure. Per the initiative, 200 miles of pipe will be replaced, enhancing services for consumers in 16 municipalities around the state.
The MPSC’s ruling will result in a monthly rate increase of $3.18 for the residential customers. However, DTE’s customers do not have to worry about the rate increase, as DTE’s buying strategies will protect the users from the recent natural gas market price increases, thus lowering their bills overall. In addition, DTE provides payment plans to those families who struggle to pay their bills.
These approvals should help the company to continue to deliver safe and reliable natural gas in the future.
Expert’s Recommendation
Analyst Neil Kalton of Wells Fargo is one analyst who feels DTE is attractively priced at the current level, and is on its way to achieving the top end of its target CAGR through 2026.
Given DTE’s strong EPS growth and robust financial position, Kalton feels the company “warrants a higher premium to the Regulated Electric peers.” Moreover, its “top tier regulatory environment” and long history of “successful financial execution” contribute to making this a high-quality company.
The analyst is also impressed by DTE’s multiple capital investment opportunities, particularly those related to grid modernization and electricity generation.
As a result, the analyst upgraded his rating to Buy from Neutral but decreased his price target to $123 from $124.
Wall Street’s Take
Turning to Wall Street, the stock has a Moderate Buy consensus rating, based on 4 Buys and 2 Holds assigned in the past three months. As for the price target, the average DTE price target stands at $123.50. This implies 6.3% upside potential from the current levels.
Disclosure: At the time of publication, Shalu Saraf did not have a position in any of the securities mentioned in this article.
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