BofA Securities has updated its outlook for Black Hills Corporation (NYSE:BKH), increasing the price target from $70.00 to $72.00 while retaining a Neutral rating on the shares. Black Hills is currently trading slightly below its 52-week peak of $74.02, at approximately $72.38, suggesting pricing pressure relative to the estimated fair value according to InvestingPro data. The modest price target boost reflects enhanced strategic positioning anticipated from Black Hills' planned merger with Northwestern Energy (NWE).
Analyst Julien Dumoulin-Smith from BofA Securities highlights that management now envisions a 5-7% compound annual growth rate (CAGR) in earnings per share (EPS), which improves upon the earlier outlook of 4-6% CAGR. Supporting this forecast is Black Hills' strong dividend history, including a 55-year streak of consecutive increases, with a current yield near 3.74%. Conversely, the stock’s price/earnings-to-growth (PEG) ratio stands at 2.7, indicating a higher valuation relative to expected growth.
Looking ahead to the fourth quarter of 2025, BofA foresees investor attention focusing on updates concerning capital deployment and financing strategies. Progress in Black Hills’ major load growth pipeline projects, notably those involving the Crusoe and Tallgrass sites, is also expected to be material. Additionally, timelines related to the filing of S-4 regulatory documentation and the joint proxy statement are important upcoming catalysts.
In the short term, Black Hills is scheduled to release its next earnings report on February 4, about two weeks from now, which could provide valuable insights into the company's financial trajectory. Despite the recent price target increase, BofA Securities has elected to keep the Neutral rating as the stock’s valuation appears relatively elevated.
Supplementary recent developments for Black Hills include results from its Q3 2025 earnings report, which showcased a stronger than anticipated earnings per share figure. The adjusted EPS measured $0.45, surpassing the consensus estimate of $0.40 by 12.5%. However, quarterly revenue slightly lagged projections, posting $430.2 million compared to the forecasted $439.96 million, a shortfall of 2.22%. Beyond earnings, Black Hills completed a significant $350 million electric transmission expansion project, known as Ready Wyoming, which enhances connectivity between South Dakota and Wyoming electric systems. This 260-mile infrastructure upgrade was finalized on schedule, entering service during December 2025.
Moreover, Black Hills has initiated a rate review application with the Arkansas Public Service Commission. The request seeks approval for an incremental $29.4 million in annual revenue to recuperate approximately $147 million invested in bolstering the safety, reliability, and integrity of its natural gas pipeline infrastructure. These actions underscore Black Hills’ ongoing commitment to infrastructure modernization and financial performance enhancement.