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Investing.com – Wolfe Research has upgraded its investment stance. xcel energy (NASDAQ:) believes the damage to utility market capitalization from the recent Texas fires has been overstated.
Wolf raised his stance on the stock from “same” to “outperform” and set a 12-month price target of $58, representing an upside of just under 14% from Friday's closing price of $51.02.
Xcel Energy acknowledged Thursday that its facility may have started the Smokehouse Creek Fire. The fire has burned more than 1 million acres since erupting last month, making it the largest wildfire in Texas history.
The company faces at least two lawsuits alleging it failed to properly maintain power infrastructure related to the fires, charges the company denies.
Excel also faces hundreds of lawsuits in Colorado. In Colorado, the company's power lines were blamed for the Marshall Fire, the state's deadliest wildfire in history. The company once again denied responsibility.
Excel stock plunged after disclosing potential damages from the Smokehouse Creek fire in Texas, and fell more than 13% this month as lawsuits from the Marshall Fire in Colorado were still pending.
“However, we believe the risk of fire damage in Texas is excessive, and this number will likely prove to be less than the $500 million in coverage under XEL's 2024 policy.” Wolf analysts said in a note dated March 10.
Mr. Excell's involvement in the Marshall fire is also questionable, Mr. Wolf added.
“Future fire risk could cause XEL to fall below previous premiums. However, the current 10% discount is an attractive entry point for quality utilities,” Wolf said.
