Hawaiian Electric Industries Inc. faces mounting financial pressure as Jefferies slashes its stock price target to $7.00 alongside an Underperform rating. The utility currently trades at $8.93, hovering just above its 52-week low of $8.68.
Jefferies Lowers Price Target to $7.00
Jefferies cut its price target on Hawaiian Electric to $7.00 from $8.75 while maintaining its Underperform rating, it.investing.com reported. The revised target reflects a sector multiple of 14.0x, down from 15.4x, alongside lower utility revenue projections for 2029.
Earlier reporting from investing.com showed Jefferies previously held a higher target of $11.75 before scaling it down to $8.75 in an earlier assessment citing wildfire exposure and financing burdens. The stock reflects a 31% decline over a six-month period.
Storm Lala Reduces Long Term Earnings Estimates
Jefferies reduced its 2026 earnings per share estimate by 11% to $0.73 due to the financial impact of storm Lala. The firm also lowered earnings estimates for 2029 through 2030 by 5% to 7%, bringing expected earnings to between $0.82 and $0.84 per share. Capital expenditures are projected to drop to $500 million annually while financing costs increase due to dilution and borrowing expenses.
Utility earnings per share are expected to drop 7% by 2029 in the absence of new rate approvals. Hawaiian Electric has not yet issued an order regarding its rate rebasing schedule, though Jefferies projects that rebasing will push 2027 earnings to $0.96 per share.
Debt Burdens Weigh on Second Quarter Earnings
Hawaiian Electric operates with a significant debt burden of $2.8 billion, maintaining a debt-to-equity ratio of 1.59, according to InvestingPro data. The company reported second-quarter core earnings of $0.13 per share, missing the Wall Street consensus estimate of $0.19.
Quarterly revenue reached $939.7 million, but higher operating costs and interest expenses weighed on performance. Core net income dropped to $22.5 million, down from $35.4 million during the same period in the previous year. Reported net income received a temporary boost to $123.2 million from a non-cash accounting benefit tied to a Maui wildfire settlement.
Wildfire Litigation Prompts Sell Rating from Analysts
The utility faces ongoing litigation connected to the August 2023 Lahaina wildfire involving its power lines, which resulted in over 100 fatalities. Ladenburg Thalmann initiated coverage on the stock with a sell rating and a $7.00 price target, pointing to a return on equity that has fallen below the authorized rate.
The company trades at a price-to-earnings ratio of 8.78, representing a discount to the S&P 500 Utilities sector, but lacks a dedicated reserve fund for potential wildfire settlement agreements.