Public Service Enterprise Group (PEG) offers long-term upside from additional utility investment and potential nuclear contracting, though the timing of those catalysts remains uncertain, RBC said in a note on Thursday.

RBC said New Jersey's regulatory outlook is improving following executive actions that could support future capital investment, but it expects the utility's earnings growth to be uneven rather than the steady growth forecast by consensus.

The brokerage said the greater regulatory clarity in New Jersey could increase its earnings estimates by 4% to 7% in 2027 and 2029.

RBC initiated coverage with a 'Sector Perform' rating and an $81 price target, saying its valuation does not include any upside from future nuclear contracts.

It added that regulatory lag and a 2026 rate freeze as reasons earnings could fluctuate before improving as new investments are reflected in rates.