Yahoo Finance Is Duke Energy Set to Lure Investors in the Long Term?
Good Weather, Bad Earnings for Duke Energy in 1Q16
Duke Energy in the longer term
Duke Energy (DUK) seems well positioned to achieve its targeted earnings growth of 4%–6% in the next couple of years. Its spending plan is likely to expand its rate base significantly. Also, natural gas (UNG) operations with Piedmont Natural Gas (PNY) on a wider landscape are expected to grow its regulated operations. Separating from its Latin American (ILF) arm could substantially reduce earnings instability.
Considering the negligible growth opportunities in Duke Energy’s mainstay electric business, it’s going beyond its traditional approach and trying options such as gas distribution and midstream. It already owns stakes in regulated pipelines such as Atlantic Coast and Sabal Trail.
Some investors are looking at Duke Energy as an attractive utility in the domain (XLU), given its slightly above-average yield and relatively lower risk.
Price targets
According to Wall Street analyst estimates, Duke Energy (DUK) has a price target of $79.80 against its current market price of $78.80. This implies an estimated upside of just 1% in one year.
Of the 24 analysts tracking Duke Energy, five have given it a “buy” recommendation, and 18 have given it a “hold.” One analyst gave it a “sell” recommendation as of May 4, 2016.
Guggenheim Securities still thinks Duke may rally 10% further from its current levels. It has a price target of $86.
By comparison, Southern Company (SO) has a target price that’s 1% lower than its current price. Its price target is $49.80 against its market price of $50. Dominion Resources (D) has a target price of $77.40, which represents a rise of 7.5% compared to its current price of $72.
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