Eversource Energy Shares: Is ES Struggling to Keep Pace with the Utilities Industry?
In the ever-evolving landscape of the energy sector, Eversource Energy (ES) continues to make its mark. With a market capitalisation of $23.5 billion, the publicly traded utility holding company serves approximately 4.4 million customers across three U.S. states: Connecticut, Massachusetts, and New Hampshire.
Over the past three months, shares of ES have shown marginal gains. However, a significant dip was observed on Aug. 25, when the Trump administration's decision to block construction of Ørsted's Revolution offshore wind project led to a 4% fall in Eversource's shares.
Despite this setback, ES's key strengths lie in its strong regulated utility model. The company has been trading above its 200-day moving average since mid-May, but has dipped below its 50-day moving average since the end of August.
In a bid to sharpen its focus, ES has divested non-core businesses like offshore wind and water utilities. This strategic move is expected to streamline operations and boost profitability.
Meanwhile, the utilities sector has seen growth, with the Utilities Select Sector SPDR Fund (XLU) recording a 5% return over the same time frame. ES, however, has underperformed XLU in the longer term, with a 10.2% rise on a year-to-date (YTD) basis compared to XLU's 11.4% rise.
PPL Corporation, another utility company, has had a relatively similar trajectory. Shares of PPL Corporation have a 9.9% gain over the past 52 weeks, but lagged behind Eversource with a 9.7% return on a YTD basis. PPL Corporation currently holds a "Moderate Buy" rating from 17 analysts, with a mean price target of $70.77, suggesting a potential upside of 11.8% from current price levels.
Interestingly, the same 17 analysts who rate ES as "Moderate Buy" have a consensus price target of $70.77 for Eversource Energy as well. This moderate buy rating, despite the stock's recent slight underperformance compared to the utilities sector, indicates a potential upside of 11.8% from current prices.
It is important to note that all information and data presented in this article are for informational purposes only. Before making any investment decisions, it is advisable to conduct thorough research or consult with a financial advisor.
For more information, please view the website's Disclosure Policy here.
