This utility stock has been on fire this year, and RBC sees nearly 20% more upside

RBC Capital Markets initiated Evergy (EVRG) with an Outperform rating and a $93 price target, implying a 19% upside, citing anticipated significant load growth and an improved regulatory environment in Kansas and Missouri. Analyst Stephen D'Ambrisi expects substantial new large load service agreements to boost Evergy's capital budget by potentially $3 billion and projects a 7.8% four-year earnings compound annual growth rate through 2029, materially above current guidance. The firm foresees further positive estimate revisions, though a formal increase in the company's stated EPS CAGR target is not anticipated until 4Q25.

Analysis

RBC Capital Markets has initiated Evergy (EVRG) with an Outperform rating and a $93 price target, projecting a 19% upside from current levels. Analyst Stephen D'Ambrisi attributes this bullish stance primarily to an anticipated significant increase in load growth. This growth is expected to be driven by forthcoming large load service agreements and a materially improved regulatory environment in Kansas and Missouri, which historically constrained valuation and earnings stability.

The analyst forecasts these developments could lead to approximately $3 billion in additional capital expenditures, significantly boosting Evergy's capital budget. D'Ambrisi projects a robust four-year earnings compound annual growth rate of 7.8% through 2029, a figure materially exceeding the company's current guidance. This suggests a strong fundamental outlook for the utility.

RBC anticipates further positive estimate revisions for Evergy, particularly in the out-years of its five-year plan. While an explicit increase in EVRG's stated EPS CAGR target is not expected until 4Q25 at the earliest, the current projections already indicate substantial upside potential. The stock has already seen a 27% surge in 2025, reflecting growing investor confidence.

Key Decisions for Investors

• Consider Evergy (EVRG) for potential capital appreciation given RBC's Outperform rating and 19% price target upside, driven by anticipated load growth and regulatory improvements.
• Monitor upcoming large load service agreement announcements and Evergy's third-quarter earnings release on November 6th for confirmation of the projected accelerated growth and capital expenditure plans.
• Evaluate the long-term earnings potential, as RBC's 7.8% CAGR through 2029 significantly surpasses current guidance, but be aware that an official EPS CAGR target revision from management is not expected until 4Q25.