On Thursday, Ladenburg Thalmann initiated coverage on shares of Evergy (NASDAQ:EVRG), an electric utility company, with a Neutral rating and a price target of $51.00. The firm's analysis points to Evergy's current trading at a 9.8% price-to-earnings (P/E) discount, which reflects its recently modified earnings per share (EPS) growth ratio and leverage metrics that are close to the threshold that could trigger a downgrade by rating agencies.
The coverage begins in the context of recent legislative developments in Kansas. The state's legislature has passed new laws that are poised to benefit Evergy, specifically allowing the company to defer the recovery of eligible capital work in progress (CWIP) investments. This legislative support is a key factor in the establishment of the company's price target.
Ladenburg Thalmann's price target of $51.00 for Evergy incorporates an adjustment for parent debt. Upon making this adjustment, the analysts have assigned a 5% premium to the utility company, which has culminated in the current price target. This premium reflects the firm's valuation of the company in the current market.
Evergy's financial performance and strategic position were assessed, considering the company's EPS growth ratio and its leverage metrics. The latter is particularly significant as it hovers near the level where rating agencies might consider a downgrade, a situation that has influenced the Neutral rating.
The initiation of coverage by Ladenburg Thalmann provides investors with a new analytical perspective on Evergy's stock, taking into account the company's financial health, recent legislative changes, and its position in the market relative to its earnings and debt levels.
InvestingPro Insights
The initiation of coverage by Ladenburg Thalmann on Evergy (NASDAQ:EVRG) offers a critical look at the company's valuation and financial health. To enrich this analysis, key metrics from InvestingPro provide real-time data that can offer additional insights into Evergy's market position. Evergy's market capitalization stands at $12.11 billion, with a P/E ratio of 16.56 reflecting the last twelve months as of Q4 2023. This ratio is slightly above the firm's noted discount, suggesting a market assessment in line with the analysts' views. Additionally, Evergy's dividend yield is notable at 4.87%, which is particularly attractive to income-focused investors, especially considering the company's history of raising its dividend for 20 consecutive years.
InvestingPro Tips highlight the company's significant debt burden and the fact that its short-term obligations exceed its liquid assets, which aligns with Ladenburg Thalmann's concerns regarding leverage metrics. On the positive side, Evergy has maintained dividend payments for 33 consecutive years, and analysts predict the company will remain profitable this year, with profitability sustained over the last twelve months. These aspects underscore the company's ability to generate consistent shareholder value despite its debt profile.
For investors seeking a more comprehensive analysis, additional InvestingPro Tips are available, offering deeper insights into Evergy's financial and operational performance. To access these tips and further enhance your investment strategy, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 6 more InvestingPro Tips available, investors can make more informed decisions regarding Evergy's stock.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.