Investing.com
Published Jul 08, 2025 06:51AM ET
Investing.com - Jefferies upgraded Southwest Gas (NYSE:SWX) from Hold to Buy on Tuesday, while raising its price target to $82.00 from $74.00. The utility company, with a market capitalization of $5.24 billion, has maintained dividend payments for 55 consecutive years and currently carries a "GOOD" overall financial health rating according to InvestingPro .
The upgrade comes as Jefferies sees "a compelling and increasingly clear path to value" for the utility company, driven by regulatory improvements and progress in the CTRI sell-down process.
Jefferies highlighted the Arizona SIM approval and Nevada formula rates as key factors contributing to an expected 11.8% EPS CAGR through FY29, significantly higher than the 6.8% consensus estimate, suggesting 10% upside potential compared to current Street expectations.
The research firm also pointed to the Great Basin expansion as providing a $1.2 billion incremental capital expenditure opportunity for Southwest Gas.
According to Jefferies, Southwest Gas is "uniquely" positioned among gas utilities for outsized returns due to 10.3% rate base growth and improving earned ROEs.
In other recent news, Southwest Gas Holdings reported its first-quarter 2025 earnings, which showed a mixed financial performance. The company exceeded earnings per share (EPS) expectations with a reported $1.65, surpassing the anticipated $1.42. However, revenue fell short, coming in at $1.3 billion against a forecast of $1.53 billion. Southwest Gas Holdings also amended its revolving credit agreement to include a swingline sub-facility, offering more short-term borrowing options. This amendment was made in collaboration with Bank of America and other lenders, introducing a one-week interest period option.
Additionally, BofA Securities upgraded Southwest Gas Holdings' stock from Underperform to Neutral, raising the price target to $74 due to recent strategic financial actions and a favorable regulatory environment in Arizona. The company has reduced its stake in Centuri Group, Inc. through a secondary offering and a private placement, generating approximately $225 million in net proceeds. These funds are expected to meet Southwest Gas's equity needs through 2025-2026. The company also reaffirmed its 2025 net income guidance of $265-$275 million, projecting a 6-8% compound annual growth rate in its rate base.
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Written By: Investing.com
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