Guggenheim upgrades six utilities, no longer has any Sell ratings in space

As previously reported, Guggenheim analyst Shahriar Pourreza upgraded six utility stocks – including three raised to Buy and three raised to Neutral – and given the ratings actions and constructive stance on the group in general, the firm notes that it no longer has any Sell ratings in the sector. Guggenheim upgraded Edison International (EIX) to Buy from Neutral with a price target of $84, up from $66, citing potential for wildfire claims recovery and “constructive litigation datapoints” for a 2025 rate case. The firm upgraded Eversource (ES) to Buy from Neutral with a price target of $72, up from $60, as it sees potential catalysts in an asset sale announcement. It also upgraded Pinnacle West (PNW) to Buy from Neutral with a price target of $78, up from $73, given its “peer-average or better” return on equity. Guggenheim upgraded Allete (ALE), Avista (AVA) and NorthWestern Energy (NWE), all to Neutral from Sell, with price targets of $58, $34 and $47, respectively. Meanwhile, the firm also lowered its ratings on six names in the group. Guggenheim cut American Electric Power (AEP) to Neutral from Buy, saying the company needs to do better to “manage investors expectations” for likely outcomes in regulatory cases; lowered DTE Energy (DTE) to Neutral on valuation; cut Evergy (EVRG) to Neutral on risk about potential reforms on the regulatory process in Kansas; lowered Idacorp (IDA) to Neutral as the company “will have its largest capex spend to date” in 2024; cut PSEG (PEG) to Neutral after the stock outperformed the utility group by 12% in 2023; and downgraded Nuscale Power (SMR) to Neutral as it notes that NuScale’s valuation is predicated on converting prospective customers into firm contracts.