Raymond James has upgraded its rating for Fortis (FTS, Financial) from Market Perform to Outperform, establishing a price target of C$69. The financial firm anticipates varied outcomes for regulated utilities under its coverage but highlights Fortis's robust strategy execution.
The utility company is currently focusing on a $26 billion investment plan over five years, which includes significant spending on transmission through ITC, resource transition projects in Arizona, and infrastructure enhancement to cater to its expanding customer base. Fortis's diverse presence across North America, combined with an anticipated growth rate exceeding 6% in its rate base, and potential benefits from stable investment themes, suggests a promising outlook for the company.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 3 analysts, the average target price for Fortis Inc (FTS, Financial) is $46.06 with a high estimate of $47.99 and a low estimate of $44.99. The average target implies an downside of 5.82% from the current price of $48.90. More detailed estimate data can be found on the Fortis Inc (FTS) Forecast page.
Based on the consensus recommendation from 12 brokerage firms, Fortis Inc's (FTS, Financial) average brokerage recommendation is currently 3.1, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Fortis Inc (FTS, Financial) in one year is $45.57, suggesting a downside of 6.81% from the current price of $48.9. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Fortis Inc (FTS) Summary page.
FTS Key Business Developments
Release Date: May 07, 2025
- Earnings Per Share (EPS): $1, a $0.07 increase over the same quarter last year.
- Net Earnings: $499 million for the quarter.
- Capital Investment: $1.4 billion invested in utility systems during the quarter.
- Rate Base Growth: Expected to increase by approximately $14 billion to $53 billion by 2029, supporting an average annual growth of 6.5%.
- US Electric and Gas Utilities EPS Contribution: $0.02 increase.
- Central Hudson EPS Contribution: $0.05 increase due to rate-based growth and conclusion of the 2024 general rate application.
- UNS Energy EPS Impact: $0.03 decrease due to lower margins on wholesale sales and higher costs.
- ITC EPS Contribution: $0.01 increase reflecting rate-based growth.
- Western Canadian Utilities EPS Contribution: $0.01 increase driven by rate-based growth.
- Foreign Exchange Impact on EPS: $0.03 increase due to a higher average US to Canadian dollar exchange rate.
- Debt Issuance: Over $1 billion issued in the first quarter to repay borrowings and fund the capital program.
- Credit Ratings: Moody's confirmed Baa3, DBRS confirmed A (low), and S&P reaffirmed Fortis Alberta's A- with a stable outlook.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Fortis Inc (FTS, Financial) reported a strong start to 2025 with earnings per share of $1, a $0.07 increase over the same quarter last year.
- The company successfully executed its capital plan, investing $1.4 billion in utility systems during the quarter.
- Fortis Inc (FTS) received a constructive regulatory outcome in British Columbia on FortisBC's multi-year rate framework.
- The company's five-year capital plan remains on track, with a focus on transmission investments and infrastructure strengthening.
- Fortis Inc (FTS) has a long track record of increasing dividends for 51 consecutive years, with a commitment to annual dividend growth guidance of 4% to 6% through 2029.
Negative Points
- UNS Energy experienced a $0.03 decrease in EPS due to lower margins on wholesale sales and higher costs not yet reflected in customer rates.
- Higher stock-based compensation and finance costs partially offset rate-based growth at ITC.
- The expiration of a PBR efficiency carryover mechanism at Fortis Alberta tempered growth quarter-over-quarter.
- Potential higher costs from government tariffs could impact customer affordability, although regulatory mechanisms are expected to mitigate shareholder impacts.
- The legislative session in Iowa is ongoing, with uncertainty around the passage of ROFR legislation as part of the Governor's energy bill.
