Tuesday, Citi began covering Evergy (NASDAQ:EVRG), a regulated electric utility company, assigning a Buy rating and setting a price target of $64.00. The firm highlighted several factors that could drive the company's growth, including legislative advantages in Kansas, a positive outlook for load growth, and a beneficial regulatory environment in Missouri.
Evergy is anticipated to gain from recent Kansas legislation that permits 90% Plant-In-Service Accounting (PISA) treatment of capital expenditures, which is expected to accelerate the rate base growth in the state. This legislative change is a key component of Citi's positive outlook on the company's future financial performance.
In addition to the favorable legislation, Citi noted the accelerating load growth within Evergy's service territories. This increase in demand for electricity is seen as a driving force for the company's growth, suggesting a robust business environment for Evergy.
Moreover, Citi sees potential upside for Evergy in Missouri over time, citing the state's favorable regulatory environment. This could provide further opportunities for the company to expand and strengthen its market position.
To underscore the firm's confidence in Evergy's near-term prospects, Citi has also initiated a positive 30-day catalyst watch. This indicates that the firm expects significant positive developments for the company within the next month that could potentially enhance its stock performance.
The combination of legislative support, expected load growth, and a conducive regulatory landscape in key operational regions forms the basis of Citi's Buy rating for Evergy. The $64.00 price target reflects the firm's assessment of the company's potential for growth and value creation.
InvestingPro Insights
Evergy's financial health and stock performance offer a mixed picture, according to InvestingPro data. With a market capitalization of $11.81 billion and a P/E ratio of 16.14, the company shows stability in its valuation. The P/E ratio has remained consistent, as indicated by the last twelve months' data as of Q4 2023. Despite a slight decline in revenue growth over the same period, Evergy boasts a strong gross profit margin of over 50%, emphasizing its ability to maintain profitability.
InvestingPro Tips highlight Evergy's long-standing commitment to dividends, having raised them for 20 consecutive years and maintained payments for 33 years. This track record is a testament to the company's financial resilience and shareholder-friendly approach. However, it's important to note that Evergy operates with a significant debt burden, and its short-term obligations exceed its liquid assets, which could pose challenges.
For investors seeking a deeper dive into Evergy's financials and stock performance, there are additional InvestingPro Tips available, providing a comprehensive outlook on the company. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription for more insights.
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