Barclays starts the U.S. Power & Utilities sector at neutral as it's 'too soon to be bullish'

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Barclays starts the U.S. Power & Utilities sector at neutral as it's 'too soon to be bullish'
Credit: © Reuters.

Barclays initiated coverage of 26 stocks within the U.S. Power & Utilities sector in a note Wednesday, taking a Neutral industry view.

Stocks that were started with an Overweight rating included Pinnacle West Capital (NYSE: PNW ), OGE Energy (NYSE: OGE ), Duke Energy (NYSE: DUK ), Public Service Enterprise (NYSE: PEG ), Sempra Energy (NYSE: SRE ), American Electric Power (NASDAQ: AEP ), Exelon Corp (NASDAQ: EXC ), PG&E Corp. (NYSE: PCG ), DTE Energy (NYSE: DTE ), and AES Corp (NYSE: AES ).

Stocks given an Equal Weight rating were PPL Corp. (NYSE: PPL ), Entergy (NYSE: ETR ), Ameren Corp (NYSE: AEE ), Atmos Energy (NYSE: ATO ), CMS Energy (NYSE: CMS ), Eversource Energy (NYSE: ES ), FirstEnergy (NYSE: FE ), Southern Co . (NYSE: SO ), Edison International (NYSE: EIX ), Evergy (NASDAQ: EVRG ), Portland General Electric Co (NYSE: POR ), Dominion Energy Inc (NYSE: D ), and Consolidated Edison (NYSE: ED ).

WEC Energy Group Inc (NYSE: WEC ), NorthWestern Corporation (NASDAQ: NWE ), and CenterPoint Energy (NYSE: CNP ) were started at Underweight.

Analysts told investors in his note that they have taken a selective stance in stock picking across the sector as they "balance underwhelming YTD performance from both stock prices and company results, sharp increases in retail rates, higher regulatory scrutiny, and elevated interest rates against waning commodity pressures, potential credit improvement, and substantial new capital opportunities driven by the Inflation Reduction Act (IRA)."

"Overall, we think it’s too soon to be bullish on the group, with our stock preferences geared toward the names with low rate offerings relative to median household incomes; limited rate case risk to achieve EPS objectives over the next year; improving balance sheets; and constructive regulatory backdrops," the analysts wrote.

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