Xcel's Fundamentals Continue To Improve And Impress, Says Argus

Argus has raised the price target on the shares of Xcel Energy Inc XEL by $2 to $48 (12 percent upside), saying the company's regulated business model will continue to drive EPS growth over the long-term, with shareholders benefiting from cash flow growth and an improving balance sheet.

"We view Xcel Energy as a stable and fully regulated utility that should be able to provide investors with growing dividend income as well as moderate share price appreciation over the next few years," analyst Gary Hovis wrote in a note.

Hovis has a Buy rating on Xcel Energy, which is an electric and natural gas utility with regulated operations in eight Western and Midwestern states.

Related Link: Xcel Energy Maintains Dividend Payout Ratio Of Over 60%

Although the company faces revenue headwinds in the form of customer conservation efforts and energy-efficiency programs, Hovis said it has "improved operating margins have improved over the last two years due to lower coal and natural gas costs for generation facilities."

"We believe that management's demonstrated execution ability as well as the company's limited risk profile, visible forward earnings stream, and attractive integrated structure are compelling reasons to own XEL shares," Hovis highlighted.

Xcel Energy sees 2016 operating earnings of $2.12–$2.27 per share, while the analyst expects operating EPS of $2.20.

At the time of writing, shares of Xcel Energy were down 1.12 percent at $42.31.