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Understanding Edison International’s Newly Added Risk Factor

Edison International (EIX) is an American electric utility company. It operates through subsidiaries Southern California Edison and Edison Energy.

For Q3 2021, Edison International reported adjusted EPS of $1.69, compared to $1.67 in the same quarter a year ago but missed the consensus estimate of $1.76. For full-year 2021, the company anticipated EPS in the band of $4.42 to $4.52.

Edison plans to distribute a quarterly dividend of $0.70 per share on January 31 to shareholders of record on December 30, 2021. EIX currently offers a dividend yield of 4.16%, compared to a sector average of 2.90%.

With this in mind, we used TipRanks to take a look at the risk factors for Edison.

Risk Factors

According to the new TipRanks Risk Factors tool, Edison International’s main risk category is Finance and Corporate, representing 51% of the total 51 risks identified for the stock. Production and Legal & Regulatory are the next two major risk categories at 20% and 14%, respectively. The company has recently updated its profile with one new risk factor under the Tech and Innovation category, which represents 4% of its total risks.

Edison informs investors that its systems and infrastructure have become targets of cyber and physical attacks. It mentions that the U.S. intelligence community has cautioned that foreign powers could launch cyberattacks to disrupt critical U.S. infrastructure such as electrical distribution networks. Additionally, financially motivated criminals could expand their targets in the U.S. in the coming years. 

Edison warns that if its systems and infrastructure were to be breached, it might be unable to deliver electricity to customers, which may lead to a material financial loss. Furthermore, a breach could damage Edison’s reputation and trigger lawsuits against the company, all of which could adversely impact Edison’s operating results and financial condition.

The Finance and Corporate risk factor’s sector average is 34%, below Edison’s 51%. Edison’s stock has climbed about 4.3% over the past year. 

Analysts’ Take

Argus analyst Gary Hovis recently reiterated a Buy rating on Edison International stock and raised the price target to $73 from $68. Hovis’ new price target suggests 13.42% upside potential. The analyst observed that Edison operates in a favorable regulatory environment and its financial strength is improving. Moreover, Hovis noted that Edison is benefiting from investments in alternative energy facilities.

Consensus among analysts is a Moderate Buy based on 3 Buys and 3 Holds. The average Edison International price target of $70.17 implies 9.03% upside potential to current levels.

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