The increased focus on decarbonization presents significant commercial opportunities for companies like Avangrid (NYSE:AGR), driving the shift towards clean energy. However, an increase in commodity prices, a sharp jump in interest rates, supply chain constraints, and persistently high inflation have raised concerns over offshore wind projects’ economic viability and could drag AGR stock lower.
Recently, the Wall Street Journal reported that higher costs are hurting U.S. offshore wind buildout, indicating trouble for AGR.
Avangrid operates as a regulated electric utility business. Moreover, it is engaged in renewable energy generation, primarily using wind power. Given the rising cost pressure, Avangrid filed a motion with regulators in Massachusetts (Massachusetts Department of Public Utilities) for the suspension of regulatory review of its Commonwealth Wind PPAs (Power Purchase Agreements) for one month.
The company stated that the suspension could allow stakeholders to re-evaluate the current economic challenges and develop solutions to make offshore wind projects more economically viable. Some of the measures may include modest changes to the PPAs.
However, the regulators turned down the company’s request, raising concerns over AGR’s prospects in the short term.
Is AGR Stock a Buy, Sell, or Hold?
AGR stock has a Moderate Sell consensus rating on TipRanks based on three Hold and two Sell recommendations. Meanwhile, the average price target of $41.40 implies 3.68% downside potential. While hedge funds bought 145.9K AGR stock in three months, it has a Neutral Smart Score of six.
