Jefferies has lowered the target price for Hawaiian Electric Industries Inc. shares from $11.75 to $8.75, maintaining a 'underperform' rating. Key factors include risks associated with wildfires and financial burdens. The new target level implies a negative total return for shareholders of 14.3%. Currently, shares are trading at $10.23, slightly above the 52-week low of $10.17, and have decreased by 31% over the past six months. According to InvestingPro, the stocks appear somewhat undervalued.
Jefferies forecasts earnings per share to rise to $0.95 by 2027, followed by a decline to $0.86 by 2029: funding for Maui's recovery is absorbing growth in the utility sector. The company also noted that liability regulations in Hawaii are still not finalized. HE operates with a significant debt load of $2.8 billion and is rapidly consuming cash: negative free cash flow after debt amounts to $565 million. Summer storms have exposed the company's physical risks. The analyst noted that the broader discount for the third fiscal year does not outweigh potential losses from fires.
Hawaiian Electric reported second-quarter results below Wall Street expectations. The adjusted earnings per share were $0.13 against a forecast of $0.19 amid rising operating expenses and interest payments. Revenue for the quarter was $939.7 million. Adjusted net income fell to $22.5 million from $35.4 million a year earlier, but total net income rose to $123.2 million due to a non-cash accounting benefit related to the settlement of fire damage in Maui.
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