Mizuho Updates New Jersey Resources Target Amid Rate Case

Author: Lucas Young Updated: 09-20-2024 08:54 AM

Mizuho Adjusts Price Target for New Jersey Resources

Mizuho Securities has recently increased its price target for New Jersey Resources (NYSE: NJR) from $45.00 to $47.00 while maintaining a Neutral rating on the stock. This adjustment reflects the firm’s optimism regarding the ongoing rate case concerning NJR's subsidiary, New Jersey Natural Gas (NJNG), which is expected to reach a conclusion in the near future. Investors and analysts alike are keenly watching this scenario as a positive resolution could act as a catalyst for NJR’s growth.

Anticipating Positive Outcomes from the Rate Case

The expected resolution of the rate case is likely to restore NJNG’s impact on NJR’s earnings, aiming to hold steady at 60-70% of its net financial earnings per share (NFEPS) target in fiscal year 2025. Industry experts view this rate case as relatively uncomplicated and anticipate that a favorable settlement will align well with NJR's operational objectives.

Investors Shift Focus to Non-Utility Segments

As the resolution approaches, Mizuho notes a potential shift in investor focus toward NJR’s non-utility business divisions. These segments have shown promising performance indicators that could contribute positively to NJR's long-term NFEPS growth, projected in the 7-9% range. While the quality of growth from non-utility segments might be seen as moderate, Mizuho believes it is likely to enhance investor perception and appreciation of these ventures.

Recent Financial Performance of New Jersey Resources

In its latest performance release, New Jersey Resources Corporation reported a robust outcome for its third fiscal quarter of 2024. The company appears on track to meet its NFEPS guidance of between $2.85 and $3.00. NJR’s Clean Energy Ventures are undergoing significant expansion, while its utility services remain critical, contributing over 60% of its expected NFEPS.

Financial Developments and Strategic Investments

Further strengthening its financial standing, NJR has introduced amendments to its credit agreements, which involve a reduction in its revolving credit facility along with an extended maturity date. The company has ambitious plans to invest between $1.2 billion and $1.5 billion over the next couple of years. Expected cash flow from ongoing operations amounts to between $420 million and $450 million for the 2024 fiscal year, providing encouragement for stakeholders.

Shareholder Returns and Growth Initiatives

NJR recently announced a boost to its quarterly dividend, raising it to $0.45 per share, marking a 7.1% increase from its previous payout. This adjustment is a strong indication of the board's confidence in NJR's financial health and its commitment to a long-term growth strategy. Additionally, the company is looking into expansion opportunities for its S&T assets at Leaf River, showing proactive engagement in driving growth through customer acquisition and transitions from alternative energy sources.

Understanding NJR's Market Position

With a market capitalization close to $4.73 billion and a Price/Earnings (P/E) ratio observed at around 19.9, NJR remains a significant entity in the market landscape. Despite facing a revenue dip of approximately 27.74% within the last twelve months, NJR exhibits a quarterly revenue growth of 4.38% as of the latest Q3 data, suggesting a possible turnaround.

Frequently Asked Questions

What is Mizuho's new price target for NJR?

Mizuho has raised its price target for New Jersey Resources (NJR) to $47.00 from the previous target of $45.00.

How does the ongoing rate case impact NJR's earnings?

The resolution of the rate case is expected to restore NJNG's contribution to NJR's earnings, aiming for 60-70% of net financial earnings per share in fiscal year 2025.

What recent changes has NJR made regarding dividends?

NJR has increased its quarterly dividend to $0.45 per share, reflecting a 7.1% increase and underscoring the board's confidence in the company's financial stability.

How much is NJR planning to invest in the coming years?

The company is planning to invest between $1.2 billion and $1.5 billion across its operations over the next two years.

What does Mizuho predict for NJR's non-utility segments?

Mizuho predicts that NJR's non-utility segments will receive increased attention from investors due to their underlying strength and potential for contributing positively to long-term growth.

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