Market Overview

Citi Upgrades PG&E, Raises Price Target By 200%

Citi Upgrades PG&E, Raises Price Target By 200%

PG&E Corporation (NYSE: PCG) has been on a huge run since the company officially filed for bankruptcy in late January, and one Wall Street analyst said Tuesday that there’s plenty more upside remaining for PG&E stock.

The Analyst

Citi analyst Praful Mehta has upgraded PG&E stock from Neutral to Buy and raised his price target from $11 to $33.

The Thesis

The huge change in target price comes after recent indications from the California legislature and governor’s office suggest a shift in urgency level related to wildfire liability legislation.

Mehta said there are four reasons he now believes new liability legislation could be passed within two or three months:

  • The governor recently voiced California’s need for timely liability legislation, a much different tone than he took just a month ago.
  • Ratings agencies have said they need to see a clear, executable action plan related to the California utilities or else they will continue to downgrade their credit.
  • Bills such as SB235 provide means of funding for liability reform, including state support via taxes or changes to the state’s cap-and-trade program.
  • The governor-appointed strike team and Blue Ribbon force is expected to make a timely recommendation for practical solutions to California’s problems.

Mehta said news from the strike team will likely be the next major bullish catalyst for PG&E stock.

“With path to legislation limiting future wildfire liabilities getting clearer, [the] current price offers a great entry opportunity with upcoming catalyst,” Mehta wrote in the note.

Price Action

PG&E was up 14.7 percent at $17.76 per share following the upgrade, but remains down 58 percent overall in the past six months.

Related Links:

Well Fargo Downgrades Edison International On Liability Legislation Pessimism

Q4 13F Roundup: How Buffett, Einhorn, Ackman And Others Adjusted Their Portfolios

Photo credit: Frank Deanrdo, Flickr

Latest Ratings for PCG

Feb 2019ArgusUpgradesSellHold
Feb 2019CitigroupUpgradesNeutralBuy
Jan 2019Wolfe ResearchUpgradesPeer PerformOutperform

View More Analyst Ratings for PCG
View the Latest Analyst Ratings

Posted-In: California wildfires Citi Praful MehtaAnalyst Color Upgrades Price Target Top Stories Analyst Ratings Best of Benzinga


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