On Monday (NASDAQ:MNDY), BMO Capital adjusted its price target for Duke Energy (NYSE:NYSE:DUK), a leading electric power holding company. The firm reduced the target to $124 from the previous $128 while maintaining an Outperform rating on the stock. This decision followed Duke Energy's third-quarter earnings report, which showed earnings per share (EPS) of $1.62, falling short of both BMO Capital's estimate of $1.68 and the consensus estimate of $1.69.
The company's management confirmed the full-year 2024 earnings guidance, projecting it to be within the $5.85 to $6.10 range. However, they anticipate landing in the lower half of this spectrum. The primary reasons cited for this expectation are the financial burdens stemming from recent storms, which include both the costs associated with restoration efforts and the revenue losses due to widespread power outages.
Despite these challenges, Duke Energy's management remains confident in their long-term EPS growth forecast, which is projected at 5 to 7 percent from the initial 2024 midpoint of $5.98. The company is now turning its attention to presenting a comprehensive update on its capital and financing strategies, as well as on load growth, in the fourth quarter of 2024.
The revised price target of $124 by BMO Capital is based on a sum-of-the-parts (SOTP) and market-to-model (M-T-M) analysis. The firm reiterates its positive stance on Duke Energy shares, indicating a continued expectation for the company's performance to outpace the broader market.
In other recent news, Duke Energy reported on its third-quarter earnings for 2024, revealing a decrease in adjusted earnings per share to $1.62, primarily due to costs related to Hurricanes Debby, Helene, and Milton.
Despite these challenges, the company successfully restored power to a significant number of affected customers and anticipates total storm costs for the year to be between $2.4 billion and $2.9 billion. Duke Energy also reaffirmed its 2024 guidance range of $585 million to $610 million, with expectations trending towards the lower end.
In terms of future developments, Duke Energy is forecasting a 5% to 7% EPS growth rate through 2028, backed by regulatory approvals and infrastructure investments. The company plans on implementing new rate structures in 2025 to aid in cost recovery and maintain service affordability, and is targeting the monetization of $300 million to $500 million in energy tax credits annually to improve financial flexibility.
InvestingPro Insights
Duke Energy's financial profile, as revealed by InvestingPro data, offers additional context to BMO Capital's analysis. The company's P/E ratio of 20.2 suggests a moderate valuation relative to earnings, while its market capitalization of $87.47 billion underscores its significant presence in the electric utilities sector.
InvestingPro Tips highlight Duke Energy's commitment to shareholder returns, noting that the company "has raised its dividend for 17 consecutive years" and "has maintained dividend payments for 54 consecutive years." This consistent dividend history aligns with the company's stable business model and may provide some reassurance to investors in light of the recent earnings miss and lowered guidance.
The current dividend yield of 3.69% could be attractive to income-focused investors, especially considering the company's track record of dividend growth. However, it's worth noting that Duke Energy "operates with a significant debt burden," which could impact future financial flexibility and dividend growth potential.
For readers interested in a more comprehensive analysis, InvestingPro offers 6 additional tips that could provide further insights into Duke Energy's financial health and market position.
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