Evercore ISI Starts Sempra Energy (SRE) at Outperform

Evercore ISI analyst Nicholas Amicucci initiates coverage on Sempra Energy (NYSE: SRE) with a Outperform rating and a price target of $105.00.

The analyst comments "We are constructive on Sempra’s share performance over the ~12-18 months as it continues to prioritize incremental investment in Sempra Texas. Given the company’s California exposure, it has some exposure to wildfire risk, which the market has inherently (and justifiably) discounted from a valuation perspective. However, we believe the wildfire/CA discount applied to Sempra is overly burdensome, especially as its service territory is far less prone to these catastrophic blazes relative to its California utility peers (i.e. EIX, PCG). While state lawmakers recently re-wrote/ proposed three bills aimed at combating rising energy costs (HERE), which included a revision to SB 254, the bill addressing the funding mechanisms for transmission and wildfire prevention, we view the associated benefits as less meaningful to the company’s longer-term Oncor plans. The revision to SB254, included a proposed $18B replenishment of the states Wildfire Fund which would evenly split the contributions between ratepayers and the utilities, which if passed by Governor Newsome by the October 13th, deadline is a positive for its California business."

For an analyst ratings summary and ratings history on Sempra Energy click here. For more ratings news on Sempra Energy click here.

Shares of Sempra Energy closed at $91.44 yesterday.

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