NJR: Differentiated Gas And Midstream Model Will Support Strong Future Cash Flows

Analysts have modestly raised their price target on New Jersey Resources, lifting fair value by about $1 to roughly $55 per share. They cite confidence in the company’s differentiated mix of core gas utility, regulated midstream assets, and disciplined capital funding that supports solid FFO-to-debt metrics despite slightly lower projected profit margins.

Analyst Commentary

Recent research updates point to a generally constructive view on New Jersey Resources, with modest upside embedded in higher price targets and continued confidence in the company’s operating model.

Bullish Takeaways

• Bullish analysts highlight New Jersey Resources’ differentiated portfolio, noting that the combination of its core New Jersey Natural Gas utility, regulated midstream assets, and select unregulated businesses supports a premium valuation versus more traditional gas utilities.
• The company’s peer leading 18% to 20% FFO to debt ratio is seen as evidence of a high quality financial model, reinforcing conviction that leverage remains manageable even as the capital spending plan advances.
• Consistent execution on capex funding without material equity dilution is viewed as a key driver of long term total returns, supporting confidence that earnings growth can translate more directly into per share value creation.
• Steady operational performance across business lines, despite ongoing scrutiny of the mix, is cited as a reason to expect the stock to re rate higher as the market gains comfort with the strategy and visibility into cash flow growth.

Bearish Takeaways

• Bearish analysts remain cautious about the complexity of the business mix, arguing that exposure to unregulated operations introduces additional execution and regulatory risk that may cap valuation relative to pure play regulated peers.
• There are concerns that maintaining an elevated FFO to debt target could become more challenging if interest rates stay higher for longer, potentially pressuring free cash flow and limiting future balance sheet flexibility.
• Some see the recent price target increase as incremental rather than transformational, suggesting that much of the near term upside may already be reflected in the shares, given modest expectations for margin expansion.
• Uncertainty around longer term gas demand trajectories and policy trends in New Jersey is viewed as a structural overhang that could restrain multiple expansion even if near term execution remains solid.

What's in the News

• Maintained long term net financial earnings per share (NFEPS) growth target of 7% to 9%, reaffirming confidence in multi year earnings visibility (company guidance).
• Introduced fiscal 2026 NFEPS guidance range of $3.03 to $3.18, based on a fiscal 2025 NFEPS starting point of $2.83 per share (company guidance).
• Signaled continued focus on executing the capital plan and funding strategy needed to support the targeted earnings trajectory through 2026 (company guidance).

Valuation Changes

• Fair Value has risen slightly, increasing by about $1 from roughly $53.57 to $54.71 per share.
• Discount Rate has inched higher, moving from about 6.93% to 6.96%, implying a marginally higher required return.
• Revenue Growth assumptions have increased substantially, from roughly 0.11% to about 3.09%, indicating a more optimistic top line outlook.
• Net Profit Margin expectations have declined modestly, easing from about 18.98% to roughly 17.46%.
• Future P/E has risen moderately, moving from approximately 16.7x to 17.5x, suggesting a slightly higher valuation multiple on forward earnings.