EXC: Future Earnings Will Reflect Pennsylvania Regulatory Upside And Defensive Power Demand Trends

Analysts have nudged their average price target on Exelon modestly higher, reflecting increased conviction that its favorable regulatory jurisdictions, expected PECO step up in Pennsylvania, and stable earnings profile support upside, even as views diverge on how quickly the current valuation discount should close.

Analyst Commentary

Street research on Exelon remains mixed, with a growing cohort of bullish analysts highlighting improving fundamentals and valuation upside, while more cautious voices question how durable the current defensive premium and regulatory tailwinds will be as risk appetite normalizes.

Bullish Takeaways

• Bullish analysts emphasize Exelon as one of the more attractive value opportunities in the regulated utility space, pointing to a roughly 10% valuation discount to peers despite a stable earnings profile.
• Several price target increases reflect confidence that Exelon can sustain mid to high single digit earnings growth, supported by constructive regulatory frameworks and visible rate base expansion, particularly in Pennsylvania.
• Expectations for a meaningful PECO rate step up around FY28 are seen as underappreciated in consensus models, providing an additional leg of medium term growth that could drive multiple expansion as visibility improves.
• Initiations with positive or above market ratings cite Exelon’s high proportion of forward looking recovery mechanisms as reducing execution risk on its capital plan, supporting a valuation at or above its historical relative multiple over time.

Bearish Takeaways

• Bearish analysts argue that Exelon’s defensive, wires only profile has already been rewarded in recent periods of macro uncertainty, and that any rotation back into higher beta names could compress the relative premium even if the stock still screens at a nominal discount.
• Hold and neutral stances reflect skepticism that investors fully appreciate regulatory and political risks in key jurisdictions such as Illinois and Maryland, which could limit upside if proceedings or policy outcomes turn less constructive than currently assumed.
• Some cautious views suggest that, while near term earnings guidance appears achievable and may even offer modest upside, the longer term growth runway is more modest versus peers levered to deregulated price upside, capping re rating potential.
• Underweight ratings and modest target raises indicate concern that the ultra defensive trade has run its course, with potential for further margin and multiple compression if risk sentiment improves and capital rotates toward higher growth power and utility names.

What's in the News

• Exelon reached a proposed settlement of shareholder derivative litigation tied to conduct described in its Deferred Prosecution Agreement, with insurers to pay $40 million to the company and Exelon agreeing to implement governance reforms, subject to court approval in March 2026 (Key Developments).
• The company plans to use $30 million of the settlement insurance proceeds to help fund a separate $173 million securities settlement in Flynn v. Exelon Corp., pending court approval (Key Developments).
• Exelon reaffirmed its 2025 operating earnings guidance at $2.64 to $2.74 per share, reflecting management’s confidence in its medium term earnings outlook (Key Developments).
• ComEd, Exelon’s Illinois utility, highlighted the opening of the new Low Income Home Energy Assistance Program application period and associated customer assistance initiatives, including expanded income eligibility and automatic enrollment in the upcoming Low Income Discount program for approved customers (Key Developments).

Valuation Changes

• Fair Value: Unchanged at $49.75 per share, indicating no revision to the intrinsic value estimate.
• Discount Rate: Edged down slightly from 6.956% to 6.956%, reflecting an immaterial change in the cost of capital assumption.
• Revenue Growth: Essentially flat, ticking up marginally from 2.9117% to 2.9117%, implying no meaningful shift in top line growth expectations.
• Net Profit Margin: Steady at approximately 12.59%, with only a minor numerical rounding change, signaling a consistent margin outlook.
• Future P/E: Stable at about 18.70x, with a negligible adjustment, suggesting no material change in forward valuation multiples.