Why Edison International Stock Withered on Wednesday

Still reeling from a recent regulatory setback in California, Edison International (NYSE: EIX) stock was dealt a fresh blow on Wednesday. An analyst tracking the California power utility made a deep cut to his price target; this, combined with generally gloomy sentiment on the company, drove the shares down by more than 6% on the day.

Power cut

Aidan Kelly from JPMorgan Chase's JPMorgan was the lead prognosticator behind the reduction. In a new research note, the pundit changed his Edison price target to $61 per share, well down from his previous $82. However, he maintained his neutral recommendation on the utility stock.

According to reports, Kelly's update was due to the aforementioned setback. The California legislature ended its current regular legislative session on Monday. Crucially for Edison in particular and the state's utilities in general, it did not take a vote on the controversial California Wildfire Liability Bill, which at one point had significant liability protections for utilities.

The analyst pointed out that this leaves Edison vulnerable, as its key subsidiary, Southern California Edison, has been hit with multiple lawsuits alleging its liability in the early 2025 Eaton fire.

High vulnerability

Edison's stock fell off a cliff when the legislature wrapped its session without voting, and I'm not convinced it's hit bottom yet. That situation with the Eaton fire is potentially a massive issue for the company, and it seems as if those originally proposed protections are too politically volatile. I'd avoid this stock for now.

JPMorgan Chase is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.