PG&E downgraded to Underweight from Equal Weight at Morgan Stanley

Morgan Stanley analyst David Arcaro downgraded PG&E to Underweight from Equal Weight with a price target of $16.50, down from $20. In the wake of the Eaton Fire, California utilities are once again exposed to “severe” financial risk, the analyst tells investors in a research note. The firm says the stocks’ “significant valuation discounts” will persist until there is clarity on the wildfire fund, alongside lingering tail risk of another catastrophic fire. Morgan Stanley believes the California wildfire fund is no longer likely to be large enough to support utility financial health. If there is no evident path forward for replenishing the fund into fire season, the stocks will face further selling pressure, it contends.