A bullish analyst says Spire and Duke Energy are undervalued after a utility selloff, citing simplified operations and renewable growth. Alpha Scores are Mixed.
A Seeking Alpha analyst with a disclosed long position in both Spire (SR) and Duke Energy (DUK) argued the utilities are mispriced after a sector-wide selloff. The analyst said investors are overlooking the stability of regulated earnings behind the recent rate and regulatory noise.
Spire recently swapped its midstream and storage assets for Piedmont Natural Gas, a deal the analyst said simplifies the company's structure and should improve returns. Duke Energy, the analyst added, is expanding renewable capacity at a scale rivals cannot match. The stock trades as if its regulated model is broken, the analyst said.
Rising interest rates and state-level regulatory changes have weighed on utility stocks broadly. The analyst acknowledged those headwinds. The view is that the selloff went too far, and both companies generate predictable cash flows from regulated operations. Their dividend yields now look attractive versus history, the analyst said.
AlphaScala's proprietary model gives Spire an Alpha Score of 40 out of 100 and Duke a score of 43, both labeled Mixed. The scores suggest the stocks carry risk but may offer upside if the market reprices the sector.
The analyst did not set a price target. The current valuations offer a margin of safety for long-term holders, the analyst said. No earnings or guidance updates were cited.
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