Wells Fargo Upgrades Portland General Electric Company (POR) to Overweight

Wells Fargo analyst Shahriar Pourreza upgraded Portland General Electric Company (NYSE: POR) from Equal Weight to Overweight with a price target of $58.00.

The analyst comments "We upgrade POR to OW as HoldCo + WA deal + RFP oppty + OR improvement + stale St ests = strong entry point, lifting our 26-30 EPS CAGR to ~7.9%, ~200 bps above Street. POR still trades like a sub-7% utility at a ~17% 2028E P/E discount to coverage. 1) HoldCo comes first, replacing ~$1.05B of potential RFP equity while protecting PGE’s balance sheet. Conventional 50/50 funding of our $2.5B ownership case would require ~$1.25B of common equity versus $200M in our model. After parent funding costs, the lower share count adds ~$0.13/share to 2030 EPS all else equal. The settlement, ahead of Sep 25th target order, preserves parent funding while requiring PGE to maintain at least 45% common equity. 2) WA begins contributing with the 1H27 close, accretive by $0.01 in its first full year. The utility adds $0.11/sh in 2027, but equity makes the stub year $(0.03) dilutive. Net accretion reaches $0.01 in 2028 and $0.22 in 2030. We assume an 8.0% earned ROE, 150 bps below the 9.5% allowed ROE, despite a capacity-short system and a first POR-led multi-year rate case, after years of underinvestment, that could improve power-cost and capital recovery. Every 50 bps of improvement adds ~$0.06/sh. 3) OR’s GRC resets recovery, while the bridge protects ~$0.10/sh annually through the MYR transition. We forecast a ~$140-$145M settlement, ~80% of POR’s request, and a 9.50% ROE. The 28-29 bridge keeps earned ROE ~8.9%, still ~60bps below allowed; no '30 MYR benefit is modeled. The 2.5% net customer impact, large load cost allocation and recent ~79-90% settlements support the outcome; we assume 50% of the 2028-29 bridge ahead of the 2030 MY, but with earnings tests and customer protections. 4) The RFP puts POR’s balance sheet behind a non-discretionary regional need. The Northwest faces a nearly 9GW supply shortfall by 2030, while PGE’s own need reaches 927MWa of energy and more than 1.5GW of capacity. We assume 2.5GW of procurement, 50% POR ownership and $2.5B of investment. RFP EPS rises from $0.03 in 2027 to $0.51 in 2030, helping drive a 12.9% ownership-adjusted rate-base CAGR. 5) Street estimates look backward at sub-6% 26-30 EPS CAGR while POR’s catalysts are pivoting toward above the industry average at ~7.9%. Our 7.9% 2026-30 EPS CAGR is ~200 bps above consensus, ~50bps above the sector avg of ~7.4% and ~90 bps above the top of POR’s 5%-7% range. POR trades at 13.2x versus ~16.0x for Northwest peers and ~16.6x for SMID utilities on consensus ests. Our 15.5x target retains a wildfire discount and supports a $58 PT, up from $51."

For an analyst ratings summary and ratings history on Portland General Electric Company click here. For more ratings news on Portland General Electric Company click here.

Shares of Portland General Electric Company closed at $50.17 yesterday.

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