PCG - PG&E raided to Buy at UBS on lower wildfire risk improving California outlook

2023-08-07 12:25:12 ET

PG&E ( NYSE: PCG ) +2.3% in Monday's trading as UBS upgraded the utility to Buy from Neutral with a $21 price target, raised from $19, citing declining wildfire risk and a constructive California regulatory outlook.

According to UBS analyst Gregg Orrill said PG&E ( PCG ) calculates it has lowered the risk of a major wildfire with its equipment by 90% since 2017-18 and 94% based on the California Public Utility Commission's Safety Model Assessment Proceeding, with use of automating line shutoffs representing 65% of the total.

Decarbonization and wildfire mitigation goals help drive top quartile 9% rate base growth in California, and PG&E ( PCG ) management has committed to O&M expense reductions, Orrill wrote.

The analyst believes regulatory lag and investor crowding represent risks to achieving the company's goals, but he still view California as an improving regulatory environment.

More on PG&E:

• Financial and valuation comparison to sector peers
• Analysis: PG&E Investor Day; Potential Dividend Reinstatement And Reduced Wildfire Risk
• Stock price return: Up 9% YTD, up 55.5% in the past 12 months

For further details see: