Investing.com -- Barclays initiated coverage of Hawaiian Electric Industries Inc (NYSE:HE) with an "Equal Weight" rating and a $10 price target on low rate base growth, flat earnings prospects, and lingering wildfire-related liabilities.
The firm noted that while Hawaiian Electric is taking steps to streamline operations and focus on its regulated utility business, its near-term outlook remains constrained. The company faces ongoing legal and regulatory uncertainty stemming from the 2023 Maui wildfires, with a key case pending before the Hawaii Supreme Court and proposed legislation that could impact its financial standing.
Barclays (LON:BARC) expects Hawaiian Electric’s earnings per share to remain flat due to future equity needs tied to $1.9 billion in wildfire-related payments through 2028. Despite this, the firm sees potential for a re-rating if regulatory and policy developments improve the company’s cost of capital and mitigate long-term liability risks.
Hawaiian Electric recently strengthened its liquidity by selling most of its stake in American Savings Bank, retaining a 9.9% minority interest valued at approximately $405 million. Barclays views this move as a positive step but remains cautious until greater legal clarity emerges.
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