WEC Energy: A Brighter Outlook Despite Regulatory Hurdles, Says Analyst

  • Mizuho Securities analyst Anthony Crowdell upgraded WEC Energy Group Inc WEC to Buy from Neutral at a price target of $98.
  • The analyst thinks the ongoing WI regulatory concerns are overblown as the company has resolved most of its WI filings early this year and now covers WI utilities through 2024. 
  • Also, Crowdell cites the ICC staff testimony in the People's Gas (PGL) and North Shore Gas (NSG) cases, published this month, as constructive. The analyst sees a revenue recommendation of around 88% of WEC's initial request and an ROE of 9.83% (vs 9.90 requested by PGL and NSG) as the favorable outcome of the case.
  • Despite a challenging hearing on WEC's multi-party case settlement in December 2022, the analyst believes the company's WI utilities are permitted above-average ROE of 9.80%, along with a higher authorized equity ratio of 53.0% (vs. 52.5% earlier).
  • This month, WEC reported Q1 2023 revenues of $2.89 billion, down from $2.91 billion, beating the consensus of $2.85 billion and EPS of $1.61, surpassing the consensus of $1.59
  • The analyst reiterated the EPS estimate of $4.62 for 2023, $4.90 for 2024 and $5.24 for 2025, with forecast rate base growth and EPS growth of around 7% and 6.7%, respectively, through 2025.
  • Price Action: WEC shares are trading lower by 0.31% at $88.99 on the last check Thursday.
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