Edison International Shares Drop 3.3% After Downgrade Amid Wildfire Concerns
Shares of Edison International (NYSE:EIX) took a 3.3% dip today, following a downgrade by Jefferies analyst Julien Dumoulin-Smith. The downgrade comes amidst uncertainty about legislative reforms and a cancelled federal grant.
Jefferies lowered its rating for Edison International from Buy to Hold, citing concerns about wildfire costs and their potential impact on shareholders. The analyst also reduced the price target to $57 from $70, reflecting high wildfire risk and slower earnings growth.
Edison International's stock has also been affected by the Trump administration's cancellation of a $600 million federal grant for upgrading electric transmission lines. This cancellation may hinder the company's efforts to improve its infrastructure and mitigate wildfire risks.
Despite these challenges, Edison International's earnings per share are expected to grow by 5%-7% through 2028. However, analysts warn that this growth may decellerate afterward due to increasing wildfire liabilities. In comparison, PG&E (PCG) is seen as more attractive, with higher growth and more predictable earnings estimates.
Dumoulin-Smith also raised concerns that Edison International may need to issue equity to address its growing wildfire liabilities, which could further impact shareholders.
Edison International faces headwinds due to wildfire risks and the cancellation of a federal grant. While earnings growth is expected in the near term, long-term prospects may be impacted by increasing liabilities. The company may need to consider issuing equity to address these liabilities, which could affect shareholders.
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