Goldman Sachs updates utility estimates ahead of Q3 earnings
Goldman Sachs adjusted utility sector estimates, lowering its baseline multiple by 0.5x due to higher interest rates. It expects 20% total return to updated price targets. The firm anticipates Q3 updates from Xcel Energy, American Electric Power, Ameren, and WEC Energy Group, with potential EPS growth outlook raises. Sempra Energy is seen outperforming consensus, while Eversource Energy may underperform.
How this was made
The 30-second read
Why it matters
Analyst estimate changes can move stock prices, especially for utilities where guidance is a key driver.
Market read
The estimate updates provide fresh guidance for several major U.S. utilities, offering traders actionable insight before earnings releases.
What to watch
Potential policy incentives for renewable upgrades may offset rate headwinds.
Background
Goldman Sachs revised its utility coverage ahead of the upcoming Q3 earnings season, adjusting multiples and price targets.
Ticker impact
Goldman Sachs lowered its utility multiple and sees potential for Xcel Energy to raise EPS growth outlook.
likely upward pressure as the market prices in the earnings outlook lift.
The estimate change is new and suggests better Q3 performance.
Goldman Sachs expects American Electric Power to meet full‑year guidance and updates its Q3 plan.
minimal movement as guidance remains in line with expectations.
No surprise in guidance, just reaffirmation.
Goldman Sachs expects Ameren to meet full‑year guidance and may raise its EPS growth outlook.
slight upward pressure from possible EPS outlook raise.
Analyst sees upside potential, which could attract buying.
Goldman Sachs expects WEC Energy Group to meet full‑year guidance and updates its Q3 plan.
limited price movement as guidance stays unchanged.
No new catalyst beyond reaffirmed guidance.
Goldman Sachs is 6% above consensus for Sempra Energy, citing warm Texas weather benefiting Oncor results.
upward pressure as the estimate exceeds consensus.
Above‑consensus estimate signals better performance.
Goldman Sachs is 12% below consensus for Eversource Energy due to lower transmission return and storm‑cost disallowance.
downward pressure as the estimate falls short of consensus.
Below‑consensus outlook may trigger sell‑side activity.
Market effects
Utility sector valuation adjusted lower due to higher rates, affecting peers broadly.
U.S. utility stocks may see modest re‑rating ahead of earnings season.
Limited to U.S. and Canadian utility investors.
Counterpoint
Higher rates could benefit utilities with strong cash flow, making the downgrade overly cautious.
Key entities
- analystGoldman Sachs
Provides updated utility coverage and price targets.
