Barclays has initiated coverage of 26 stocks in the U.S. power and utilities sector, expressing a neutral view on the industry. The bank believes that while it is too early to be optimistic about the sector, there are several aspects to appreciate. Barclays analyst Nicholas Campanella highlights long-term benefits from decarbonization strategies, electrification, and electric vehicles, as well as a strong capital spending trajectory due to the Inflation Reduction Act. The bank’s top-rated stocks in the sector include PG&E, Duke Energy, American Electric Power, and Pinnacle West Capital.
Barclays is particularly bullish on AES Corp. and Sempra among diversified utilities. At the small-cap level, the bank rates OGE Energy as overweight and NorthWestern as underweight. DTE Energy is seen as a positive investment due to regulatory de-risking through H2 2023. However, Barclays advises caution with CenterPoint Energy and WEC Energy, rating them as underweight, given their leverage profiles and exposure to general rate cases relative to their P/E premiums. Other stocks in the sector are rated as equal weight or overweight.
In summary, Barclays has initiated coverage of a range of stocks in the U.S. power and utilities sector with a neutral view. While the bank does not express bullishness towards the sector as a whole, it acknowledges the potential benefits from decarbonization strategies, electrification, and increased capital spending. Barclays highlights specific stocks, such as PG&E and Duke Energy, as well-positioned in the industry. The bank also provides ratings and recommendations for other utility stocks, including AES Corp., Sempra, OGE Energy, NorthWestern, DTE Energy, CenterPoint Energy, and WEC Energy.