Utilities Set for a Bullish 2025: Insights from JPMorgan

Analysts from JPMorgan, Jeremy Tonet and Richard W. Sunderland, have expressed their excitement about the outlook for utilities in North America as they prepare for what could be a remarkable 2025.

This optimism is driven by an increase in power demand and important growth factors such as electrification, the expansion of data centers, and the trend of bringing manufacturing back to local shores. All these elements contribute to a promising environment for utility stocks.

Among their top recommendations in the utility sector are Vistra Corp (VST), Entergy Corp (ETR), NiSource Inc (NI), and PG&E Corp (PCG). Below is a closer look at what makes these companies great picks for 2025.

1. Vistra Corp

Vistra stands out as JPMorgan's leading choice largely due to its significant presence in Texas. The company greatly benefits from being a key player in the Electric Reliability Council of Texas (ERCOT), complemented by its strong retail operations and the benefits from nuclear production tax credits following its acquisition of Energy Harbor.

Vistra is well-positioned to take advantage of rising baseload demand, a tightening supply of electricity, and favorable pricing conditions within ERCOT. The company's guidance projects double-digit EBITDA growth through 2026, and its capacity to secure contracts for gas plants as well as respond to regional spikes in power prices keeps it in an advantageous position.

2. Entergy Corp

Entergy has been gaining attention due to its recent investments, especially the deal with Meta Platforms, which is investing $10 billion in data centers located in Louisiana. This move has positioned Entergy to boost its load growth and achieve impressive compound annual growth rates in industrial sales.

The rising demand from the Gulf Coast and Entergy's ability to replicate successful frameworks are key factors driving its performance. This means the company has the potential for increasing earnings and expanding its customer base significantly.

3. NiSource Inc

NiSource is capitalizing on the demand for data centers in the Midwest, with studies indicating substantial generation needs in the region. The company anticipates an annual EPS growth rate of 6%-8% and a 8%-10% growth rate for its rate base, making it an attractive mid-cap utility.

JPMorgan sees potential for NiSource to experience a pivotal shift, especially with new load announcements that could boost earnings predictions for 2025.

4. PG&E Corp

PG&E is highlighted for its robust growth potential, reporting an expected 10% growth in EPS alongside solid financial strategies, supported by a recent equity raise. JPMorgan underscores the importance of PG&E's investments in wildfire mitigation, its data center initiatives, and the possibility of gaining significant value from revaluations.

Additionally, updates regarding its system investment requirements in the fourth quarter are anticipated to serve as critical growth drivers for 2025 and the years ahead.

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Utility, Investment, Growth