On Monday, BMO Capital has adjusted its stance on Dominion Resources, Inc. (NYSE:D), downgrading the utility company's stock from Outperform to Market Perform. The firm has set a price target of $49.00 for the shares, suggesting a modest potential for price appreciation.
The revision comes after a reevaluation of the stock's valuation. BMO Capital acknowledges Dominion Resources' successful achievement of goals set during its strategic review initiated in November 2022. Despite this, the firm's analyst points out that the stock is trading at a multiple that is in line with its projected 2026 earnings per share, excluding 45Z credits.
The analyst's updated sum-of-the-parts (SOTP) target price of $49 per share indicates an expected 2% price appreciation and an 8% total return, factoring in the company's current 5.6% yield. This projection is based on the belief that any further rerating of the stock's multiple may not occur within the time frame that investors are currently considering.
In light of these considerations, BMO Capital has also revised its earnings estimates for Dominion Resources for the years 2024 through 2026. The new estimates are set at $2.75, $3.41, and $3.58 for the respective years, adjusted from previous estimates of $3.00, $3.50, and $3.71. These updated figures reflect the firm's latest expectations for the company's financial performance over the next few years.
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