UBS downgraded Sempra Energy (SRE) to Neutral from Buy with a price target of $78, down from $95. The firm says it cannot defend a Buy thesis following the cut in guidance, and tells investors in a research note that Sempra’s unexpected rebase on earnings growth and 11% reduction to guidance has caused the firm to reevaluate the growth prospects for the stock from here. The firm believes the Neutral rating is warranted given increased uncertainty around delivering 9% or better EPS growth through 2029, as well as regulatory risk that is now more elevated going into the cost of capital proceeding in California amid a tough environment for utilities and a general rate case filing later this year in Texas for Oncor.
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