Summary
Wolfe Research raised its rating on FirstEnergy Corp. to Outperform from Peerperform and assigned a $50.00 price target, citing newly identified upside in transmission capital expenditures subject to FERC approval. That incremental capex is driving an expectation that FirstEnergy's rate base will expand at about a 10% pace, supporting EPS growth toward the high end of the company's 6-8% guidance range, according to Wolfe.
Details of the upgrade
Wolfe Research highlighted several drivers behind the upgrade. The firm said FirstEnergy's 2025 guidance was revised upward and tightened, and that 2026 guidance sits 9% above its original midpoint. Wolfe also pointed to an Ohio rate order issued last year as effectively removing the HB6 regulatory overhang that had weighed on investor sentiment.
The research house contrasted its current view with its stance a year earlier, when it downgraded FirstEnergy amid concerns about downward EPS revisions and regulatory uncertainty. Wolfe now describes the trajectory as reversed, with regulatory and earnings trends moving in a more favorable direction.
Additional company developments noted by Wolfe and others
Wolfe Research identified West Virginia generation assets as the next area of focus for FirstEnergy, a development that contributed to the firm’s more positive outlook on the utility.
Other market participants and ratings agencies have also taken note of recent company actions. S&P Global Ratings upgraded FirstEnergy's credit rating to 'BBB+' from 'BBB', citing improved governance following the company's response to the H.B. 6 bribery scandal and saying the company had strengthened its risk management and internal controls.
Jefferies raised its price target for FirstEnergy to $49 while maintaining a Hold rating, noting that investors are awaiting additional color on strategy and performance from the upcoming fourth quarter 2025 earnings call.
On the capital markets and regulatory front, FirstEnergy Transmission extended the exchange offer deadline for $450 million in senior notes to January 21, 2026; the company said that 99.88% of the outstanding notes had been tendered by the original deadline. Separately, FirstEnergy reached a settlement that will provide $275 million to Ohio customers, resolving multiple regulatory matters with the Public Utilities Commission of Ohio.
Interpretation
The combination of transmission capex upside, higher guidance for near-term years, credit rating improvement and regulatory settlements forms the basis for Wolfe Research's more favorable recommendation. The firm’s shift underscores that the balance of risks and catalysts for FirstEnergy has changed compared with its position a year ago.
Key points
- Wolfe Research upgraded FirstEnergy from Peerperform to Outperform and set a $50.00 price target, citing incremental FERC transmission capex upside.
- Analysts expect FirstEnergy's rate base growth to reach about 10%, with EPS growth tracking toward the top end of the company's 6-8% guidance range.
- Recent developments include a S&P upgrade to 'BBB+', Jefferies raising its price target to $49 (Hold), an exchange offer extension for $450 million of senior notes, and a $275 million settlement with Ohio regulators.
Risks and uncertainties
- Reliance on FERC approval - The upgrade depends on incremental transmission capital expenditures being realized and approved by FERC, which remains an external regulatory risk affecting utilities and the broader power sector.
- Regulatory resolution timing and outcomes - While an Ohio rate order has eased a prior overhang, regulatory matters and settlements remain a source of uncertainty for investor returns and credit metrics in the regulated utilities sector.
- Execution on generation asset plans - Plans for West Virginia generation assets are a cited next focus; how those assets are managed or monetized will affect earnings and strategic outcomes.