Improved chances for Sempra projects merit Morgan Stanley price hike

|About: Sempra Energy (SRE)|By:, SA News Editor

Sempra Energy’s (SRE +0.5%) price target is raised to $142 from $132 at Morgan Stanley following the company’s liquefied natural gas export wins, but the firm maintains its Equal Weight rating and remains cautious because of risks around California wildfire legislation.

SRE yesterday signed an agreement with Saudi Aramco for 5M mt/year of LNG offtake from its Port Arthur LNG export project under development, and Stanley sees improved chances of moving forward with the project with seven of 11M mt/year now under agreement.

But the firm says it is concerned with risks in California, which include a failure to reach any outcome on wildfire legislation, legislation requiring a significant contribution to a statewide wildfire fund, and the potential for any new utility-caused wildfire anywhere in the state to reduce investor interest in owning California utilities as a whole.

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