Yahoo Finance Analysts Expect Hefty Upside for Exelon
Exelon Has Beat Estimates for 10 Quarters: Can It Do It in 4Q15?
Price targets
According to Wall Street analyst consensus, Exelon (EXC) has a one-year price target of $33.20 against its current market price of $27.80 as of January 27, 2016. This indicates a possible upside of nearly 20% in one year.
Of the 22 analysts tracking Exelon, nine recommend “hold,” while 13 recommend “buy.” None of the analysts recommend “sell.”
As for Exelon’s peers, Duke Energy (DUK) has a one-year estimated upside of ~6%, according to analyst estimates. It has a price target of $75.90 against its current market price of $71.80. Another utility giant, NextEra Energy (NEE), has an estimated price target of $117.60. This amounts to a possible upside of 11%. NEE is currently trading at $105.60.
Outlook
Exelon (EXC) is targeting an annual earnings growth of 3%–5% per year. It has a capital spending plan of $18 billion for the next five years, which will focus on transmission and distribution. Exelon is the biggest utility by market capitalization with maximum exposure to unregulated operations. However, Exelon has allocated the majority of its spending capital to its regulated operations. According to management, by 2018, nearly 60% of Exelon’s total earnings with Pepco Holdings (POM) will be derived from its regulated operations.
Exelon management considers interest rate hikes as a performance driver in the recent future. It’s the biggest concern for the whole utility sector (VPU). According to Exelon’s management, every 25 basis point rise in interest rates will uplift Exelon’s earnings by $0.02 per share. This is because Exelon’s subsidiary Commonwealth Edison’s ROE (return on equity) is directly tied to the 30-year Treasury rate. Rising interest rates also benefit Exelon in the discounting of its pension liabilities.
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