Duke Energy Corp (NYSE:DUK) appears poised for an inflection in earnings, with a more favorable regulatory backdrop in 2021 and positive revisions to integrated resource plan capital expenditures, according to BofA Securities.
The Duke Energy Analyst: Julien Dumoulin-Smith upgraded Duke Energy from Neutral to Buy and reduced the price target from $87 to $85.
The Duke Energy Takeaways: With Duke Energy’s stock trading at a 110% discount versus the group, acute fears are already reflected in the share price, Dumoulin-Smith said in the Wednesday upgrade note.
Expectations are currently low, and investors seem to be overlooking the potential earnings inflection from the regulatory work that the company has been pursuing, the analyst said.
“Given the recently filed IRP likely gravitating toward the 70% CO2 reduction scenario with high wind/base hybrid w/ stakeholders, we assume $1bn of incremental spend in the initial 5yr window vs. $56bn base plan for T&D interconnect opportunities,” he said.
“While pending coal ash rate case remains outstanding, we perceive an order similar to Dominion as quite likely; this would help firm up doubtful expectations. Further, we anticipate existing settlements in the rate case to remain intact despite concerns otherwise too.”
DUK Price Action: Shares of Duke Energy were trading 2.99% higher to $83.11 at last check Wednesday.