Mizuho analysts believe a certain natural gas and electricity provider could be one to watch for investors despite a temporary overhang.
The firm "continue to recommend" San Francisco-based PG&E Corp. (NYSE:PCG) as "a deep-value play," which is currently trading at a 22% P/E discount, the analysts told investors in a note last week.
In 2019, PCG entered a bankruptcy agreement that stated its aggregate earnings must equal $6.2 billion before it can institute a dividend, and Mizuho sees the company reaching that threshold during the third quarter. However, they state that with delays in the current rate case, they believe management will focus on the rate case and delay any dividend announcement until 2024.
Even so, it's "no time to panic," says the analysts, who have a Buy rating and a $19 price target on the stock. When the dividend is reintroduced, Mizuho sees PCG's dividend growth being in line with its earnings growth of ~10%.
The dividend announcement delay is a "temporary overhang," according to Mizuho, with the firm believing "investors will continue to focus on the wide P/E discount and outcome of the rate case."
Despite the firm's positivity on the stock, PCG is down on Tuesday, adding to its 7% decline over the last month. Even so, the stock has fared better when looking at the wider picture, climbing 28% in the last 12 months.