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DTE Energy Upgraded to Overweight by Barclays, Shares Up

Zacks Equity Research
Updated

DTE Energy Company’s DTE shares inched up 0.82% to close Wednesday’s trading session at $80.25 after Barclays upgraded the stock to "overweight" from "equal weight", with a price target of $89.

According to Daniel Ford, an analyst at Barclays, the rating agency believes that “uncertainties associated with the delayed passage of Michigan legislation, extension of bonus depreciation, growth visibility of the P&I (Power and Industrials) business and worries about the Gas Storage and Pipelines business are misplaced”.

The firm is positive about the earnings and value prospect associated with DTE Energy’s unregulated businesses. It expects competition to diminish due to weakness in the Master Limited Partnership and YieldCo space, which will allow the company to assess added opportunities at its hurdle rates over the next few years.

Detroit, MI-based DTE Energy is a holding company with subsidiaries engaged in regulated and unregulated energy businesses. The company’s unregulated businesses include gas storage and pipelines; unconventional gas exploration, development and production; power and industrial projects, and coal transportation and marketing; and energy marketing and trading operations.

We note that DTE Energy remains focused on improving its cost structure and directing capital investments toward renewable generation, utility infrastructure, environmental compliance assets and reliability of its electric utility systems. It has billions of dollars of capital investment budget through 2020 to drive growth. Improving economic fundamentals in Michigan are an added stimulus for the company. Also, it reported impressive third-quarter results with improved earnings and revenue performances mainly attributable to a return to more normal weather and storm activity at the electric utility and lower operating expenses. This has also encouraged management to raise its full-year earnings guidance.

Zacks Rank

DTE Energy currently holds a Zacks Rank #3 (Hold). Some better-ranked stocks in the power sector are Calpine Corp. CPN, Public Service Enterprise Group Inc. PEG and Southern Company SO. While Calpine Corp. sports a Zacks Rank #1 (Strong Buy), both Public Service Enterprise and Southern Company carry a Zacks Rank #2 (Buy).

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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
SOUTHERN CO (SO): Free Stock Analysis Report
 
CALPINE CORP (CPN): Free Stock Analysis Report
 
DTE ENERGY CO (DTE): Free Stock Analysis Report
 
PUBLIC SV ENTRP (PEG): Free Stock Analysis Report
 
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Zacks Investment Research