Tuesday, Alliant Energy (NASDAQ:LNT), a $15.2 billion utility company with a defensive beta of 0.52, faced a rating downgrade by Barclays from Equalweight to Underweight, despite a price target increase to $61 from $59. The revision comes as Barclays analysts express concerns over challenges that could impede the company’s long-term growth and execution of its extensive renewable energy plans. According to InvestingPro analysis, the stock appears to be trading near its Fair Value, with a comprehensive Pro Research Report available for deeper insights.
Barclays analysts highlighted potential risks associated with Alliant Energy’s ambitious renewable build-out strategy. The company is expected to update its five-year capital plan within the first quarter of 2025, which analysts anticipate will extend its long-term earnings per share compound annual growth rate (CAGR) of 5-7% after factoring in new investments aimed at serving data centers, primarily in the Iowa service territory. InvestingPro data reveals the company’s strong dividend track record, having maintained payments for 55 consecutive years with a current yield of 3.42%.
Alliant Energy has established itself as a leading U.S. utility with a significant commitment to integrating renewable energy into its rate base and future capital expenditures. With annual revenue of $3.98 billion and a P/E ratio of 21.93, the company maintains a FAIR financial health score according to InvestingPro metrics. Notably, renewables, mainly solar and batteries, account for 45% of the company’s five-year capital expenditure plan—the highest proportion in the coverage universe of Barclays.
The analysts at Barclays caution that increases in tariffs could adversely affect the company’s projects, potentially altering the timing of commercial operation dates (CODs) and overall affordability. They also indicate that, in the event of an outright repeal of transferability, Alliant Energy, as the largest beneficiary within their coverage universe, could see a substantial impact, with a 225 basis points attribution to funds from operations (FFO) to debt.
Investors and stakeholders in Alliant Energy will be closely monitoring the company’s forthcoming capital plan update, which will be crucial in assessing the feasibility of its renewable energy initiatives and their alignment with the company’s growth projections.
In other recent news, Alliant Energy has announced a significant leadership transition. John O. Larsen, the current Chairman of the Board, will retire following the 2025 Annual Meeting of Shareowners. Patrick E. Allen, a board member since 2011, has been appointed as the new Board Chair, effective after the meeting. This transition is part of the company’s planned succession process and was disclosed in a filing with the Securities and Exchange Commission. In addition to leadership changes, Jefferies has adjusted its price target for Alliant Energy, increasing it from $66.00 to $70.00 while maintaining a Hold rating. Jefferies expects Alliant Energy’s capital expenditures to reach $1.96 billion through fiscal year 2031, contributing to the company’s growth. The firm also projects a compound annual growth rate of 6.5% for earnings per share through fiscal year 2027. These developments reflect Alliant Energy’s ongoing strategic initiatives and commitment to corporate governance.
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