Sector Spotlight: Utility stocks in focus after first quarter earnings

Welcome to the latest edition of “Sector Spotlight,” where The Fly looks at a new industry every week and highlights its happenings.

UTILITY SECTOR NEWS: Elementl Power Inc. announced the signing of a strategic agreement with Google (GOOGL) to pre-position three project sites for advanced nuclear energy. As part of the agreement, Google will commit early-stage development capital to advance the development of three projects. Each project would generate at least 600 megawatts of power capacity, with the option for commercial off-take once complete. Together with Google, Elementl Power will work collaboratively with utility and regulated power partners to identify and advance new projects.

The Trump administration is considering several executive orders aimed at speeding up the construction of nuclear power plants to help meet rising electricity demand, according to Brad Plumer and Lisa Friedman, citing drafts reviewed by The New York Times. This comes after Axios’ Daniel Moore reported that The White House is planning executive action soon to try to speed nuclear reactors’ deployment. One or more orders will likely lean heavily on the Department of Defense and Energy as a way to meet soaring energy demand, according to the article.

EARNINGS RECAP: Sempra Energy (SRE) reported first quarter earnings yesterday, beating EPS consensus, but falling short in revenue. “We are pleased to report a solid quarter for Sempra, which is the direct result of continued focus on delivering strong financial performance while making steady progress on our strategic initiatives,” said Jeffrey Martin, CEO. “We remain committed to our disciplined growth strategy, which centers on delivering safer and more reliable energy to the nearly 40 million consumers we serve. These value creation initiatives aim to increase long-term value for shareholders, employees, customers and other stakeholders. In Q1, we made steady progress against our plan of execution. As we extend this work across 2025, we expect to advance the company’s ability to deliver improved earnings growth and drive enhanced benefits for consumers and communities across our service territories.”

Vistra’s (VST) Q1 results showed that the company’s revenue surpassed last year’s figure. “The Vistra team kicked off 2025 with another strong quarter of business performance. We reliably produced electricity during multiple winter storms across the country, delivering the energy our customers needed,” said Jim Burke, president and chief executive officer of Vistra. “Our plants achieved commercial availability of approximately 95% while our retail business grew in both volume and customer count year-over-year. These results, which continue to be supported by our comprehensive hedging program, are evidence of the resiliency of our business, even with the volatility in today’s markets. With the strong Q1 results, we are reaffirming our 2025 guidance range and have continued confidence in the long-term earnings power of our company. Through our integrated business model, Vistra remains well-positioned to create sustained, long-term value. Importantly, as the markets continue to evolve, our purpose does not change. Our team is focused on ‘lighting up lives, powering a better way forward’ by generating reliable and affordable electricity, delivering innovative solutions to the customers and the communities we serve, while providing strong financial performance to our shareholders. We are excited to be part of the solution in meeting the coming power demand growth and look forward to executing on the exciting opportunities ahead.” UBS raised the firm’s price target on Vistra to $160 from $154 and reiterated a Buy rating on the shares. Vistra delivered positive Q1 results and commentary around 2026 EBITDA, the analyst told investors in a research note. The firm expects completion of the Texas legislative session will remove a significant legal uncertainty with respect to signing long-term nuclear purchased power agreements in the Electric Reliability Council of Texas.

American Electric (AEP) beat expectations in Q1 and reaffirmed its full-year outlook. “Our robust operating earnings results this quarter reflect our team’s continued focus on execution and innovation to deliver on our commitments to our customers, communities, regulators and investors. This strong performance gives us the confidence to reaffirm our 2025 operating earnings guidance of $5.75 to $5.95 per share. We also reaffirm our projected long-term growth rate of 6% to 8%,” said Bill Fehrman, AEP president and chief executive officer. Guggenheim elevated the firm’s price target on American Electric to $115 from $109 and kept a Buy rating on the shares after the company reported “a solid beat” and reaffirmed its FY25 EPS guidance range and long-term EPS growth rate.

In a similar fashion, WEC Energy (WEC) reported results that beat analyst consensus and backed its FY25 guidance. Additionally, the company issued Q2 guidance on its earnings conference call. “Our positive Q1 results were driven by continued economic growth in our region and a strong focus on operating excellence,” said Scott Lauber, president and CEO. “We will continue to execute on the fundamentals – customer satisfaction, financial performance and steady execution of our capital plan.” Scotiabank increased its price target on WEC Energy to $115 from $110 and maintained an Outperform rating on the shares. The firm remains bullish on the stock as it believes the above average EPS/DPS growth and consistency should be attractive in today’s uncertain macroeconomic environment, the analyst said.

Duke Energy (DUK) beat Q1 expectations and kept its FY25 guide the same as well in its report on Monday. “I am incredibly proud of our performance in the first quarter, which is a result of the constructive regulatory outcomes the team has delivered over the last several years,” said Harry Sideris, Duke Energy president and chief executive officer. “The fundamentals of the company are stronger than ever, positioning us extraordinarily well to meet our customers’ growing and evolving energy demands – now and into the future.” Citi boosted its price target on Duke to $142 from $130 and backed a Buy rating on the shares. The company used the recent capital market strength in Q1 to sell 53% of at-the-market and 40% of debt 2025 plan, the analyst toldinvestors. The firm contends that while not the best market signal, it was likely better than planned pricing.

ADDITIONAL ANALYST COMMENTARY: Erste Group downgraded NextEra Energy (NEE) to Hold from Buy. The company’s “sharp increase” in long-term financial debt has led to a significant rise in its net interest expenses, the analyst noted.

Citi downgraded National Grid (NGG) to Neutral from Buy with a price target of 1,050 GBp, down from 1,063 GBp. The firm views the shares as fairly valued following a 10% re-rating in the last three months. Citi now sees the shares as fairly reflecting National Grid’s growth prospects combined with policy and regulatory support.