PCG: Upcoming $73 Billion Transmission Spend Will Meet Surging Power Demand

PG&E’s analyst price target has increased to $21, up from $19.50. Analysts point to continued strong rate base and earnings growth potential, supported by elevated electricity demand and ongoing regulatory developments.

Analyst Commentary

Analysts continue to weigh both the significant opportunities and the ongoing challenges facing PG&E. Recent research highlights the utility’s exposure to industry-wide trends as well as company-specific catalysts and risks.

Bullish Takeaways

• Multiple recent price target increases reflect confidence in PG&E’s sustained earnings growth and rate base expansion, driven by rising electricity demand and constructive regulatory frameworks.
• PG&E is distinguished as a top pick among U.S. utilities, with analysts citing a “once in a generation opportunity” created by accelerating power needs, especially from data centers and high-growth infrastructure areas.
• While the share price is trading at a discount to sector peers, several catalysts have the potential to unlock valuation, including an upgrade to investment grade status and a growing dividend yield.
• Integrated utilities with solid regulation are expected to have the best opportunity for expanding their asset base. PG&E is frequently included in this category due to ongoing earnings conservatism and improved risk/reward profile.

Bearish Takeaways

• Ongoing regulatory uncertainty, especially around return on equity decisions and the cost of capital, continues to weigh on the stock, with recent recommendations pointing to further ROE cuts for California utilities, including PG&E.
• Analysts warn of limited room for favorable regulatory adjustments in the near term, as affordability remains at the forefront of policy debates, constraining upside from regulatory action.
• Some research teams see slower progress on permanent wildfire liability solutions, which adds to the cautious sentiment regarding long-term risk exposure and could delay a rerating in valuation.
• Certain ratings and price target reductions highlight concerns over the timeline for resolving state legislative and policy fixes, as well as skepticism around the immediacy of positive outcomes from ongoing initiatives.

What's in the News

• PG&E plans to invest $73 billion by 2030 to upgrade transmission infrastructure and address soaring electricity demand led by new data centers (Reuters).
• California lawmakers reached an agreement to raise the state's wildfire utility fund by $18 billion, with costs split between ratepayers and utility shareholders. Higher potential fire liabilities continue to increase risk exposure for utilities including PG&E (Bloomberg).
• PG&E Corporation issued new earnings guidance for 2026, projecting EPS of $1.62 to $1.66. This represents a 9% increase over the 2025 midpoint (company guidance).

Valuation Changes

• Fair Value Estimate remains virtually unchanged at $21.23 per share, reflecting stability in the underlying valuation assessment.
• Discount Rate has edged down marginally from 6.96% to 6.96%, indicating a slightly lower perceived risk profile.
• Revenue Growth projection holds steady at approximately 3.88% annually, showing confidence in the company’s growth trajectory.
• Net Profit Margin is effectively unchanged at 14.25%, suggesting a consistent profitability outlook.
• Future P/E Ratio has declined from 15.69x to 14.52x, representing a moderate compression in the forward earnings multiple.