DTE Energy (NYSE:DTE), NiSource (NYSE:NI) and CMS Energy (NYSE:CMS) were upgraded Tuesday to Buy from Neutral at UBS, which advocates a narrow exposure to utilities and recommends slowly building positions based on the potential for sustained growth from the IRA-driven capital cycle.
UBS said DTE Energy (DTE) has overly discounted a weak outcome in the last Michigan rate case in a jurisdiction that still places the utility in the top quartile for regulatory ranking.
NiSource (NI) has several catalysts upcoming with the sale of the NIPSCO minority interest and a potential for a positive capex revision around renewable generation projects; the bank also likes the continued focus on cost management, and a steep decline in natural gas prices YTD will help minimize bill pressure to customers.
Public Service Enterprise Group (PEG) is rated Buy as a low-risk company that does not have material rate case risk in 2023, and UBS believes the GSMP III outcome could push the stock higher within the 6%-7.5% rate base growth range.
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