MGE Energy (MGEE) has strong growth potential, driven by a diversified business model, $1.9 billion in planned investment and favorable regulation, but its premium valuation limits upside, BofA Securities said in a note Thursday.

The analysts said the company has a differentiated business that includes regulated electric and gas utilities, leased power generation, and a minority stake in American Transmission Company. This mix provides earnings visibility, diversification and several opportunities for growth.

The company's plan to invest $1.9 billion through 2030 could also support faster earnings growth, according to the note.

Wisconsin's forward-looking test years, project preapproval and returns during construction also help the company turn these investments into earnings. The investment firm said it is positive on the business but awaits a better price.

BofA initiated coverage of MGE Energy at neutral with a $76 price target.

The company's shares were down 1.4% in Thursday trading.

Price: 69.86, Change: -1.00, Percent Change: -1.41