SR: Initiating at Overweight, $96 PT

研报英文原文证据摘录

SR: Initiating at Overweight, $96 PT

ord of execution.

Catalysts skewed to the upside, but execution is critical… SR has made a handful of strategic

announcements recently, which we view as constructive, but successful closing of these transactions is

key. The proceeds of these transactions will be used to offset Debt attributed to the Tennessee asset

acquisition and the combined moves should reduce EPS volatility and create a more regulated earnings

profile. A favorable outcome in the upcoming MO rate case filing is critical (SR plans to file in the

2H26), as it will introduce a forward-looking test year, and likely reduce earnings lag and unlock future

upside growth and capex. MO has emerged as a state that is supportive of business development with

strong population growth. Residential gas bills remain at a minimal portion of total customer wallet

share in each of its jurisdictions, which is key, especially during an affordability year. SR Screens medium

risk in our regulatory rankings (all else equal). Mississippi, Alabama, and Tennessee jurisdictions screen

low risk as there are no rate case filings this year, while Missouri screens medium risk, is 56% of SR’s

total rate base, and the company plans to file a major rate case (implementing forward test years) in

the 2H26.

Business mix and capex profile… No DC uplift, but less volatile earnings profile post strategic

sale agreements… SR is not levered to large load/data center-driven demand, but its EPS profile

is compelling at 5-7% with low risk (we model ~7% EPS CAGR through 2030). ~63% of its capex

profile over the next 5-year plan is in MO, and we believe if SR receives a constructive outcome in the

upcoming rate case, there could be opportunity for further upside in MO given the state’s business