On Tuesday, Goldman Sachs commenced coverage on shares of Eversource Energy (NYSE:ES), issuing a Buy rating and setting a stock price target of $73.00. The firm highlighted the stock's attractive valuation, potential for capital investment growth in transmission and load, and an improving financial position as the primary reasons for the optimistic stance.
Eversource Energy's market performance currently reflects a 17% discount compared to its peers, excluding California utilities. This valuation gap is considered excessive by Goldman Sachs, which anticipates a 6% compound annual growth rate (CAGR) in earnings per share (EPS) for the company through 2027.
The investment firm's analysis suggests a substantial upside for Eversource Energy, with a projected 30% total return leading to the $73 stock price target over the next 12 months. This assessment is based on the company's current trading position and the expected positive developments in its financial and operational metrics.
Goldman Sachs' coverage of Eversource Energy comes as the utility sector faces various challenges and opportunities, with companies like Eversource positioned to capitalize on investment and growth prospects. The firm's endorsement serves as a signal to investors regarding the potential value and performance of Eversource Energy in the market.
With this new coverage, Eversource Energy investors and market watchers will be monitoring the company's performance to see if it aligns with Goldman Sachs' projections and if the stock can indeed achieve the anticipated growth and returns.
InvestingPro Insights
As Goldman Sachs starts coverage on Eversource Energy with a bullish outlook, real-time data from InvestingPro reinforces some aspects of their analysis. The company's market capitalization stands at a robust $21.02 billion, reflecting its significant presence in the utility sector.
Despite a challenging year, with a 1-year price total return of -23.21%, Eversource Energy boasts a high dividend yield of 4.81%, underlining its commitment to shareholder returns which aligns with the InvestingPro Tip that the company has raised its dividend for 25 consecutive years.
The adjusted P/E ratio for the last twelve months as of Q4 2023 is 16.7, suggesting a more favorable valuation in comparison to the current negative P/E ratio of -47.16. This improvement in valuation metrics could be a key factor for investors considering the company's future profitability, supported by another InvestingPro Tip indicating that net income is expected to grow this year.
Investors looking for more guidance can find additional insights with InvestingPro, which offers further tips on Eversource Energy's financial health and future prospects. For example, while the company operates with a significant debt burden, analysts predict it will be profitable this year. For those interested in a deeper dive, there are more InvestingPro Tips available, and you can use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.
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