BofA Securities has revised upward its price target on Consolidated Edison, elevating it from $96 to $99 per share. This adjustment coincides with the New York Public Service Commission's unanimous clearance of the utility's three-year gas and electric rate plan for 2026 through 2028, a development regarded by BofA as a "key regulatory milestone." Nevertheless, the brokerage persists with an Underperform recommendation on the stock.
Currently, Consolidated Edison’s shares trade at $103.18, with valuation metrics including a price-to-earnings (P/E) ratio of 18.13 and a price-to-earnings-growth (PEG) ratio of 2.32. These indicators imply the stock may be overvalued relative to its projected growth regime.
Although the firm’s increase in price target marks a positive shift, BofA Securities emphasizes that the risk/reward balance of Consolidated Edison remains predominantly tilted towards downside when compared with industry peers. Over the trailing year, the stock has gained 17.61% in price, nearing its 52-week peak of $114.87.
BofA notes that the newly sanctioned rate settlement affords improved short-term visibility for the utility’s revenue and earnings. However, the brokerage highlights a lack of significant additional catalysts following the rate case that could propel growth beyond the company's own guidance range of 5-7% annual EPS expansion over the long term.
Specifically, analyst Ross Fowler points to "rising affordability policies" as a regulatory and operational factor likely to constrain growth prospects, further supporting the cautious outlook.
In recent operational developments, Consolidated Edison has agreed to divest its approximately 6.6% ownership in Mountain Valley Pipeline, LLC to a fund managed by Ares Management for $357.5 million. This transaction encompasses interests in both the Mountain Valley Pipeline and its principal expansion project, with the base purchase price subject to typical post-closing adjustments.
Additionally, a subsidiary, Consolidated Edison Company of New York, has secured a $500 million senior unsecured term loan under a 364-day credit agreement. The purpose of this financing is to repay portions of an existing unsecured term loan facility, reflecting ongoing capital structure optimization efforts.
On the analyst front, TD Cowen initiated coverage of Consolidated Edison with a Hold rating and set a $105 price target, citing its defensive role within the utilities sector. UBS also adjusted its price target modestly upward from $104 to $105 while maintaining a Neutral rating, anticipating forthcoming regulatory activities surrounding an electric and gas rate case stipulation. Moreover, RBC Capital began coverage with a Sector Perform rating and a $114 target price, noting a constructive regulatory environment in New York state.
These recent ratings and corporate actions illustrate continued strategic and financial adjustments occurring within Consolidated Edison's operating framework as it navigates regulatory mandates and market conditions.