Goldman Sachs Positive on CMS Energy (CMS) as Michigan commission approves settled IRP
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Goldman Sachs analyst Michael Lapides reiterated a Buy rating and $72.00 price target on CMS Energy (NYSE: CMS) on news the Michigan Public Service Commission (MPSC) voted to approve the recent settlement agreement reached by CMS Energy (CMS, Buy) in the proposed Michigan electric generation transition plan, which we view as positive.
The analyst commented, "This decision allows CMS to eliminate all coal-fired generation exposure by 2025, while replacing with a combination of gas-fired generation, renewables, and purchase power agreements (PPAs). From a financial perspective, we expect CMS to achieve above-8% EPS growth through 2025; our estimates reflect 8.7% CAGR from 2021A-2025E which largely reflects the items in the now approved IRP. We continue to view CMS as a premium regulated utility with best-in-class growth supported by a constructive Michigan regulatory environment, with our unchanged $72 price target reflecting 18% total return versus 14% for regulated utility peers. We also see this as positive for DTE Energy (DTE, Buy, on CL; last close $117.90), the other Michigan-based utility with plans to file its Integrated Resource Plan (IRP) later this year."
Shares of CMS Energy closed at $62.73 yesterday.
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