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What Does Duke Energy’s Newly Added Risk Factor Tell Investors?

Duke Energy (NYSE: DUK) is a Fortune 150 company based in North Carolina. It distributes electric power and natural gas, serving some 9.5 million customers across several states. The company is shifting its portfolio to renewable energy and is targeting 16,000 megawatts of renewable power capacity by 2025. Additionally, the company is working on reducing its carbon footprint and aims to cut its carbon emissions by 50% by 2025 and achieve net-zero emissions status by 2050.

With this in mind, we used TipRanks to take a look at the latest financial performance and newly added risk factors for Duke Energy.

Q3 Financial Results

Duke Energy reported revenue of $6.95 billion for Q3 2021, falling short of the consensus estimate of $7.31 billion. Revenue was $6.72 billion in the same quarter last year. It posted adjusted EPS of $1.88 against $1.87 in the same quarter last year and beat the consensus estimate of $1.79.

Risk Factors

According to the new TipRanks Risk Factors tool, Duke Energy’s stock main risk category is Legal and Regulatory, representing 28% of the total 32 risks identified for the stock. The company recently updated its profile with one new risk factor under the Financial and Corporate category, which accounts for 22% of its total risks.

Duke Energy cautions that actions by activist shareholders could adversely affect its business. It mentions that it was recently targeted by activist investor Elliott Management. It says that activist shareholders may, from time to time, seek to assert influence on its board and management, which could cause uncertainties over the company’s future direction. As a result, the company may have difficulties executing its strategy or retaining qualified personnel. Additionally, the company warns that its stock price may fluctuate as a result of actions by activist shareholders.

The Finance and Corporate risk factor’s sector average is 37% compared to Duke Energy’s 22%. The Legal and Regulatory risk factor’s sector average is 20%, against Duke Energy’s 28%. Duke Energy’s stock has gained about 11% year-to-date.

Analysts’ Take

Barclays analyst Eric Beaumont recently initiated coverage of Duke Energy stock with a Hold rating and a price target of $110. Beaumont’s price target suggests 8.73% upside potential. The analyst noted that although Duke Energy’s accelerated clean energy investments could provide upside to the stock, that is already reflected in the current price.

Consensus among analysts is a Hold based on 1 Buy and 5 Holds. The average DUK stock price target of $105.83 implies 4.61% upside potential to current levels.

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