SRE - DTE Energy NiSource CMS Energy raised to Buy at UBS

2023-06-06 14:58:02 ET

DTE Energy ( NYSE: DTE ), NiSource ( NYSE: NI ) and CMS Energy ( NYSE: CMS ) were upgraded Tuesday to Buy from Neutral at UBS, which advocates a narrow exposure to utilities and recommends slowly building positions based on the potential for sustained growth from the IRA-driven capital cycle.

UBS said DTE Energy ( DTE ) has overly discounted a weak outcome in the last Michigan rate case in a jurisdiction that still places the utility in the top quartile for regulatory ranking.

NiSource ( NI ) has several catalysts upcoming with the sale of the NIPSCO minority interest and a potential for a positive capex revision around renewable generation projects; the bank also likes the continued focus on cost management, and a steep decline in natural gas prices YTD will help minimize bill pressure to customers.

Public Service Enterprise Group ( PEG ) is rated Buy as a low-risk company that does not have material rate case risk in 2023, and UBS believes the GSMP III outcome could push the stock higher within the 6%-7.5% rate base growth range.

Among regulated utilities, UBS also rates Exelon ( EXC ) and Sempra ( SRE ) at Buy, while downgrading American Electric Power ( AEP ) and CenterPoint Energy ( CNP ) to Neutral from Buy.

More on DTE Energy:

• Financial and valuation comparison to sector peers
• Analysis: DTE Energy: Grid Modernization Creating Margin Expansion
• Stock price return: Down 6.5% YTD, down 17% in the past 12 months

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