Barclays reinstates Eversource Energy stock rating at Equalweight

Barclays reinstated Eversource at Equalweight with a $76 price target versus a $71.92 share price, citing estimates 1%–2% below consensus and a 14.7% P/E discount to peers on 2029 estimates. Barclays expects the discount to persist amid roughly 7% rate-base growth, 5%–7% EPS growth versus an 8% sector average, and ongoing regulatory proceedings, while identifying $700 million of transmission upside. Separately, Eversource’s Q3 2026 adjusted EPS of $1.19 beat the $1.01 consensus, but revenue of $2.98 billion missed the $3.25 billion forecast; the company’s dividend yield was 4.38%.

Analysis

The valuation question is whether regulatory outcomes can close a discount that may partly reflect structurally slower growth—not simply whether the rate case is at a sentiment low. If Connecticut PURA testimony lowers allowed returns or the New England ROE adder is removed, lower earnings power could outweigh any multiple catch-up; that would also raise the bar for regulated utilities seeking investor capital. Conversely, favorable decisions and FERC recognition of transmission returns could improve the earnings-growth profile, but the cited transmission upside is not equivalent to near-term, realized earnings.

Asset sales and storm securitization can ease funding and balance-sheet concerns, but may also exchange future earnings or asset optionality for near-term proceeds. The dividend is therefore not, by itself, evidence that the equity is mispriced: track cash available after investment and financing needs. The quarterly earnings beat alongside a revenue miss is not enough to establish a stronger trend; verify the drivers and whether guidance or cash conversion changed.

Near term, the recent outperformance and Barclays’ Equalweight stance argue against chasing a rerating. Over 1–3 months, PURA testimony and rate-case developments are the clearest sentiment catalysts. Over 6–18 months, realized rate-base growth, allowed returns, and balance-sheet execution determine whether the discount is excessive. Contrarian point: a rate-case sentiment trough could create an entry, but a persistent discount may be rational if growth and returns remain below peers.

Key Decisions for Investors

• Avoid chasing ES after its recent outperformance; treat it as a catalyst-dependent watch rather than a high-conviction valuation long.
• Consider a staged long only after PURA testimony or a decision clarifies allowed returns, with exposure sized around the downside risk from an adverse Connecticut outcome or removal of the New England ROE adder.
• For a relative-value screen, compare ES with regulated-utility peers on forward rate-base and EPS growth, allowed returns, and funding needs before taking a long-peer/short-ES position; the reported discount alone is not a sufficient signal.
• Monitor confirmation points: Connecticut rate-case outcomes, FERC treatment of NETO returns and transmission upside, updated EPS guidance, and cash flow after investment and financing. Reassess the thesis if guidance weakens or regulatory returns disappoint; upgrade conviction only if favorable decisions translate into realized earnings.