Guggenheim lays out 2023 utilities outlook, upgrades two, downgrades six stocks

Guggenheim analyst Shahriar Pourreza is downgrading and upgrading some names in the utilities and power sector in conjunction with the firm’s 2023 outlook, stating that it the "turbulent end to 2022 has shifted our stance on the sector and investment allocation for 2023." If an investor "had to own 1 utility in 2023," the firm contends that should be FirstEnergy (FE), which was upgraded to Buy from Neutral with a price target of $46, up from $34, and moved to the firm’s Best Idea list, replacing PG&E (PCG). The firm is taking a "value" bend, as it argues that valuation dispersions "can be an opportunity for both upsides and downsides" if investors are nervous about next year’s EPS numbers, long-term growth revisions, regulatory risks, and headwinds to company guidance. In that context, Guggenheim also upgraded One Gas (OGS) to Neutral from Sell with a price target of $77, up from $64. The firm downgraded three stocks to Neutral: Ameren (AEE), CenterPoint Energy (CNP), and OGE Energy (OGE). It also downgraded three to Sell: Allete (ALE), Alliant Energy (LNT), and NorthWestern Energy (NWE).