On Tuesday, Goldman Sachs initiated coverage on shares of Edison International (NYSE:EIX) with a Neutral rating and a price target of $78.00. The coverage is based on the firm's view of the company's potential to benefit from the electrification needs in California, but tempered by near-term uncertainties.
Edison International's current position allows it to potentially capitalize on the growing demand for electrification in California. However, Goldman Sachs points out that the benefits of this demand are expected to materialize over a longer period. In the short term, the firm identifies regulatory challenges as a cause for concern, particularly due to Edison International's ongoing rate case and significant wildfire cost recovery requests.
The firm's analysis suggests that Edison International's earnings growth may not stand out compared to its peers. This assessment has contributed to the decision to maintain a Neutral stance on the stock. Despite this, the firm's price target implies a 15% total return over a 12-month period, based on their calculations.
Goldman Sachs forecasts a 7% compound annual growth rate (CAGR) in earnings per share (EPS) for Edison International through 2027. This projection is included in their rationale for the $78 price target, indicating a belief in the company's steady growth potential over the next few years.
The initiation of coverage by Goldman Sachs provides investors with a detailed perspective on Edison International's financial outlook, balancing the company's long-term opportunities with the immediate challenges it faces in the regulatory landscape.
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