Guggenheim cuts PG&E stock rating amid regulatory uncertainty

Investing.com -- Guggenheim downgraded PG&E Corp (NYSE: PCG) to Neutral from Buy given an ongoing regulatory uncertainty in California despite the utility’s strong fundamentals.

The brokerage pointed to investor concerns surrounding the wildfire liability framework under California’s AB1054 law, particularly following the January wildfires in Southern California. While there is no direct link between PG&E and the fires, Guggenheim said legislative uncertainty has created a vacuum for investors, making it difficult to assess upside potential.

"Even great execution on utility plans doesn’t get enough investor interest,” in this environment analysts said adding that long-term investors may hesitate until there is more clarity from state regulators and lawmakers.

PG&E shares have fallen nearly 26% versus the UTY index since the fires, and the firm does not see a material downside given the current valuation. However, without a clear regulatory fix, the stock is likely to remain rangebound.

Guggenheim set a price target of $16, down from $18, aligning its PG&E rating with Edison International (NYSE: EIX), while maintaining a Buy on Sempra Energy (NYSE: SRE).

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