Analysts have advised investors to stay calm after Edison International (EIX) stock plunged, as the company has come under scrutiny for its potential role in the LA wildfires that have claimed several lives and started encroaching on the iconic Hollywood sign.
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EIX shares dropped 10% in Wednesday’s trading ahead of today’s stock market closure in honor of former President Jimmy Carter. Edison International’s Southern California Edison (SCE) serves as the power utility for the areas surrounding the city of Los Angeles.
In a statement, the company highlighted the most significant ongoing fires, including the Palisades, Eaton, and Hurst fires. It went on to note that the Palisades Fire, the largest in the region, began Tuesday morning, but the reported origin area is outside of SCE’s service area. However, the company confirmed that the Eaton Fire started within its service area and that it has transmission facilities near the reported ignition site of the Hurst fire.
Is EIX Stock Oversold?
Jefferies analyst Julien Dumoulin-Smith stated in a note to clients that investors seemed nervous, displaying a “sell first, ask questions later” mentality. “We remain comfortable due to the AB 1054 liability protections, which limit the tail risks for the utilities,” he was reported by CNBC as saying.
Wells Fargo analysts also felt the reaction in the share price was “overdone,” while Bank of America highlighted that the liability protections now in place for utilities significantly reduce the downside risks.
EIX Regulatory Outlook “May Change”
Citi analyst Ryan Levine believes that this season’s fires, particularly the Palisades fire, could alter the political and regulatory view of wildfire risk in California.
This shift could impact SCE’s cost recovery for the legacy Woolsey fire, Levine said in a research note. Citi expects California utility stocks to remain volatile and weak until the risk is more clearly understood. Levine has a Buy rating on the stock, with an $86 price target.
Is EIX Stock a Good Buy?
Overall, Wall Street has Moderate Buy rating on EIX stock, based on eight Buys, three Holds and two Sells. The average EIX price target of $88.38 implies a 27.2% upside potential from current levels. Shares of EIX have fallen 13% in 2025.
