Goldman Upgrades Exelon, Says It's Otherwise Cautious On Energy Group

Expected higher energy pricing in most regions in coming years led Goldman Sachs to boost target prices on Exelon Corporation EXC and Public Service Enterprise Group Inc. PEG — while staying cautious on the sector as a whole.

The Analyst

Michael Lapides upgraded Exelon from Neutral to Buy and boosted the target price from $48 to $52.

Lapides remained Neutral on on Public Service Enterprise Group and raised the target price from $56 to $59.

The Thesis

Goldman is upgrading Exelon largely as a result of updated pricing forecasts, Lapides said, adding that he expects prices to increase in 2020 and 2021 across most regions. (See Lapides' track record here.) 

The company is “an outperformer in a group that we remain cautious on overall," the analyst said. 

Exelon

Several catalysts could play out for Exelon over the coming months, including resolution of a long-sought subsidy for nuclear power plants in Illinois and the potential for rate-making changes in Illinois, Lapides said. 

Exelon’s 8-percent total return makes it one of Goldman’s top stocks in the utilities coverage area, the analyst said. 

Public Service Enterprise Group 

The outlook for PEG is less bullish — even with higher price expectations — because of a difference in markets, Lapides sqaid. 

Goldman is increasing earnings estimates and the target price for the company, but sees a total return of just 1 percent, in-line with peers, the analyst said. 

Price Action

Exelon shares were up more than 1 percent at $50.76 at the time of publication Friday, while Public Service Enterprise shares were up 0.94 percent at $60.89. 

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Photo by Bill Tracey/Wikimedia.