Jefferies Upgrades Southwest Gas (SWX) to Buy

Jefferies upgraded Southwest Gas (NYSE: SWX) from Hold to Buy with a price target of $60.00 on valuation.

Analyst Christopher Sighinolfi commented, "As previously noted, the recent rise in US Treasury yields has created headwinds for utility names and led to a ~5% drop in the XLU since mid-April. SWX shares have fared worse over the period, declining ~8% due to disappointing 1Q results driven by poor weather & a loss reserve booking in Canada. Similar to the 2014 EPS profile, we expect a recovery in 2H as the loss reserve reverses and the Link-Line acquisition is fully integrated. Moreover, we look to the next AZ rate case filing & conclusion to set up earnings growth in 2017."

He added, "Our $60 PT is derived via a combination of DCF, DDM, SOP, and Target Yield approaches. We project respective EPS & dividend CAGRs of ~6% and 11% from 2014-19. Unexpected regulatory outcomes, Centuri contracting & execution risk, regional economic conditions, and interest rates all pose risks to our EPS & dividend projections and to our price target."

For an analyst ratings summary and ratings history on Southwest Gas click here. For more ratings news on Southwest Gas click here.

Shares of Southwest Gas closed at $53.33 yesterday.

You May Also Be Interested In

• JPMorgan Upgrades JetBlue Airways (JBLU) to Neutral, 'second least-liked airline based on sellside rating'
• RBC Capital Reiterates Outperform Rating on Bank of America (BAC)
• Equifax (EFX) shares tumble on weak Q1 revenue, guidance miss