Bank of America Securities analyst Ross Fowler maintained a Sell rating on Southwest Gas (SWX – Research Report) yesterday and set a price target of $73.00.
Ross Fowler’s rating is based on the unbalanced risk/reward profile of Southwest Gas Holdings. While the company has shown improvements in its regulated gas utility business through positive regulatory reforms and strong customer growth, there are significant concerns regarding the separation of its utility infrastructure services business, Centuri. The ongoing challenges at Centuri, including a decrease in net income due to lower contract volumes and budgetary issues faced by key customers, contribute to this cautious outlook.
Additionally, the uncertainty surrounding the conclusion of Centuri’s separation adds a meaningful overhang on the stock. Despite the company’s efforts to manage costs effectively and execute its regulatory strategy, the lack of visibility into the resolution of Centuri’s issues remains a critical factor in the Sell rating. The focus on strategic outlook for 2025, including updates on guidance and regulatory developments, is crucial, but the overhang from Centuri continues to weigh heavily on the stock’s prospects.
SWX’s price has also changed slightly for the past six months – from $72.810 to $75.360, which is a 3.50% increase.