Itron (ITRI) PT Lowered to $105 at BNP Paribas Exane

BNP Paribas Exane analyst Moses Sutton lowered the price target on Itron (NASDAQ: ITRI) to $105.00 (from $115.00) while maintaining a Outperform rating.

The analyst comments "There is a lingering view that utilities lack a true incentive to advance AMI 2.0 plans, and that the 2030 outlook will be driven by continuous 1-2% replacement of the existing fleet plus 1-3 chunkier contracts (i.e. '26 / '27 story). This materializes in low-mid single digit growth and pushout of AMI 2.0 into the 2030s. What this view ignores is ticking clock on the 20-yr lifecycle of AMI 1.0. The 20-yr mark isn't a suggestion to replace the fleet, rather it's a firmer deadline on where obsolescence risk forces the hand. For DTE , 20% of its fleet will be >20 yrs by 2030 and ITRI will phase down service availability beyond 2030 (ITRI won't 'cut them off', but it steers preplanning). For SCE, servicing AMI 1.0 will cost an incremental $140 mn each year after 2029. ComEd models exponential failure rates 2030+. How does this translate to bookings? SCE is asking regulators to approve a bulk rip-and-replace from '29-'33 for 5.7 mn meters, inclusive of DI (similar to Xcel's deployment). Costs are estimated at $1.9 bn and final PUC decision / bookings would come 2H27. However, this appears to be a rare case. ComEd (case closing 4Q26 / 1Q27 for '28 start) and DTE are pursuing a more even keeled 5-10% p.a. replace to 2040+, targeting at-risk meters first and DI starting in pilot phases. This is our base case AMI 2.0 structure (including the pushout of DI). Still, between the cases of SCE and ComEd, annual spend is >$250/meter thru the install cycle. So, while the shape of installs may not be as massive as the ramp of 1.0, stacking many 5-10% replace + 1-3 lumpier contracts at higher value positions '29 / '30 revenue near / above $3 bn. Do we need more utility dockets to underwrite stronger '27 bookings? Yes, but obsolescence risk puts AMI 2.0 back on the front-burner over the next 12 months. Valuation: 10x (vs. 11x prior) '28 (vs. '27) EV / EBITDA. TP $105 (vs. $115)."

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