Sempra (SRE) Confronts Legal Uncertainty, Analysts Adjust Targets

Sempra (NYSE:SRE) is one of the best infrastructure stocks to buy right now. On January 26, Jefferies’ Julian Dumoulin-Smith lowered his price target on Sempra (NYSE:SRE) to $89 from $95 and kept the Hold recommendation intact. The analyst cited California risks as the reason for the price target reduction.

The adjustment stems from new legal challenges facing SoCalGas, a Sempra unit, over its response to the Eaton fire. This challenge, said Dumoulin-Smith, heightens overall operational uncertainties for the company.

The analyst observed that investors previously saw Sempra’s California operations as less exposed to wildfires than competitors, but this perception is now shifting due to this case. As a result, the analyst also trimmed projections to account for changes in California’s capital cost assumptions and outcomes from the track two regulatory process.

In a separate update, on January 22, BMO Capital analyst James Thalacker cut the price target on Sempra (NYSE:SRE) to $100 from $103 and reaffirmed an Outperform rating. Thalacker labeled the stock’s recent plunge an overreaction to Southern California Edison’s lawsuit accusing SoCalGas of mishandling the Eaton fire.

According to the analyst, he took into account initial fire damage projections and the fact that over 12 defendants face similar claims. As such, Thalacker adjusted downward his projections for Sempra’s California utility segment. He also predicted investor skepticism would linger until Sempra files its defense in the litigation.

Sempra (NYSE:SRE) is a San Diego, California-based energy infrastructure company. It provides electricity and natural gas to nearly 40 million consumers across North America. It operates one of the largest energy networks in the region, with assets spanning transmission, distribution, and storage systems.

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Disclosure: None. This article is originally published at Insider Monkey.