CenterPoint Energy (CNP) PT Raised to $43 at Wolfe Research

Wolfe Research analyst Steve Fleishman raised the price target on CenterPoint Energy (NYSE: CNP) to $43.00 (from $42.00) while maintaining a Outperform rating.

The analyst comments "We are Outperform rated on CNP. We like CNP’s core utility story with projected rate base growth of ~11% through 2030, which places it amongst the highest within the entire sector. Robust rate base opportunities are underpinned by solid customer growth in key service territories – Houston Electric expects ~2% customer growth annually for the foreseeable future and CNP’s gas LDCs experience about 1% customer growth annually. This growth profile is aided by targeted annual 1-2% O&M reductions, which will help keep the impact to customer bills manageable; securitization charge roll-offs also provide headroom on customer bills (~4% of the current average residential bill rolled off in Oct. 2024). Since Hurricane Beryl, CNP has made considerable progress in correcting its mis-steps: accelerating resiliency initiatives and settling a revised System Resiliency Plan (SRP), proposing a constructive mobile gen. solution, receiving approval for an uncontested settlement in CEHE's rate case with a boost to both ROE/equity ratio, and advancing its capital tracker filings. CNP also has L-T capex/EPS upside potential from incremental transmission investment in Houston driven by TX's strong organic growth, higher SRP spend beyond 2028, modernizing substations to support Houston downtown's revitalization, localized transmission/high-pressure distribution at TX Gas, and transmission/data centers at IN Electric. Thus, we believe that CNP deserves to trade at a ~20-25% premium to our targeted group average of ~17.0x in 2027."

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