Guggenheim Reiterates Buy Rating on Sempra Energy (SRE)

Guggenheim analyst Shahriar Pourezza reiterated a Buy rating and {REMOVEPT} price target on Sempra Energy (NYSE: SRE).

The analyst commented: "Late Friday, the CPUC issued a proposed decision in the SDG&E and SCG general rate case. The recommendation included reductions in revenue increases for 2024, reduction in attrition year revenues to ~4% and reduction to test year rate base (in particular for SCG). We caught up with the company shortly after to reconcile the details of the PD. While mgmt. could not comment on the outcome earnings trajectory, mgmt. noted that the outcome is not a P10/P90 outcome, so it’s within the planning parameters. In part the decision is reminiscent of PCG’s GRC where certain reductions were deferring to intervenors positions vs. balanced outcomes (i.e. undergrounding vs. covered conductor) and in other cases left room for separate recovery proceedings (PCG subsequently filed as directed). The attrition year increases of 4% were also recommended under the guise of “challenging the utility to do better” vs. fundamental needs for program/project recovery. While we see the PD as adverse vs. plan, given’s SRE’s diversified regulated and unregulated business mix, we anticipate no change to
current EPS guidance even if the PD is approved as is. "

For an analyst ratings summary and ratings history on Sempra Energy click here. For more ratings news on Sempra Energy click here.

Shares of Sempra Energy closed at $85.96 yesterday.

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