Initiate At Buy: California Roots, Texas Runway

研报英文原文证据摘录

Initiate At Buy: California Roots, Texas Runway

5.51 $5.95 earnings visibility and reducing lag. As a result, returns are expected to move closer to

P/E 19.8x 18.2x 16.9x 15.6x authorized ROE, supporting stronger cash flow conversion. We view this as a key inflection

Consensus EPS $4.69 $5.11 $5.52 $5.99 point, enabling accelerated investment in Texas under a more constructive regulatory

Consensus source: FactSet framework.

Dividend ■Repositioning Toward Regulated Growth. Sempra sold a majority stake in Sempra

Infrastructure Partners (SIP) to KKR, retaining a 25% ownership to preserve LNG upsideYear $2.58 $2.63 $2.71 $2.79

while shifting strategic focus toward its regulated utility platforms. We view this shift as

positive, as it enables the company to concentrate capital on higher-visibility, rate base-

driven growth, particularly in Texas.

■California Providing Stability with Risk. Sempra’s California operations continue to function

as a stable, cash-generating platform, supporting consolidated earnings and credit quality.

Near-term visibility is anchored by key regulatory catalysts, including pipeline safety and

wildfire mitigation proceedings, which should help reduce uncertainty. We view California

as a funding source for higher-growth regions, with capital increasingly redeployed into

Texas, despite wildfire risks that continue to weigh on valuation.

■Valuation And EPS Forecast. We derive a $110 price target for Sempra using a sum-of-the-

parts approach applied to our 2027 EPS estimates. At the core of our framework, we apply

baseline multiples of 18.1x for electric utilities and 16.8x for gas utilities, reflecting differing

growth and risk profiles across the portfolio. We then adjust around these baselines by

segment.