Jefferies raises Spire stock price target on pipeline expansion

Jefferies raised Spire's price target to $95 from $93 and maintained a Buy rating, forecasting 7.2% EPS CAGR for fiscal 2027-2030 versus Spire's 6.0% guidance midpoint and roughly 6.5% Street consensus. The analyst cited improved Alabama regulatory outcomes and Missouri Gas expansion, expected to contribute a $0.24 per-share annualized earnings run rate by fiscal 2031 and beyond. Spire's fiscal Q3 adjusted loss of $0.26 per share was wider than the $0.20 expected loss, though revenue of $420.2 million exceeded forecasts and the company reiterated full-year guidance.

Analysis

SR’s investment case is shifting from a valuation/re-rating story to an execution-and-regulatory-duration story. The incremental pipeline contribution is long-dated and therefore supports rate-base visibility, but it is unlikely to materially change near-term EPS; the more immediate determinant of multiple expansion is whether management can protect authorized returns through weather-normalization, usage recovery, and future rate constructs. A regulated-only structure should lower earnings volatility and potentially reduce the equity risk premium, but only if the next rate outcomes demonstrate that regulatory support is repeatable rather than asset-specific.

The key competitive implication is relative: SR should be compared with gas-distribution peers such as ATO, NFG, NJR and SWX, where investors pay premiums for cleaner regulatory jurisdictions, stronger organic rate-base growth, or less winter-weather exposure. SR can outperform over the next 1-3 months if investors accept earnings growth above guidance, but the stock remains vulnerable to a guidance reset if winter usage is weak and unrecovered attrition persists. The dividend is supportive for total return, yet it also limits financial flexibility if capital spending or allowed-return timing disappoints.

Consensus may be underweighting the asymmetry of regulatory outcomes: limited incremental downside from the recent Alabama outcome does not mean the issue is resolved across the portfolio. Conversely, a successful next Missouri filing or evidence of early pipeline spend being included in rate base could narrow SR’s valuation discount to higher-quality LDC peers over 6-18 months. The thesis is falsified by FY2027 EPS guidance moving below the current Street trajectory, an adverse Missouri regulatory decision, or leverage/coverage deterioration that puts dividend-growth credibility at risk.

Key Decisions for Investors

• Initiate a small long SR position only on post-results or rate-case-driven weakness; target a 6-12 month total-return trade, with upside tied to a valuation catch-up versus ATO/NJR if forward EPS growth is sustained above 6.5%. Do not chase a broker-target-driven move without updated rate-base and financing disclosures.
• Use a relative-value expression: long SR / short ATO or NJR in equal beta-adjusted notional for 3-6 months only if SR’s forward EPS estimate revisions turn positive while the valuation discount remains intact. Exit if SR’s FY2027 estimate is cut again or if the pair closes materially before a verified regulatory catalyst.
• Set an event alert around the next Missouri regulatory filings and fiscal-year guidance update. A mechanism that restores weather/usage recovery would support adding exposure; continued unrecovered usage attrition converts the pipeline upside into a later-dated benefit and argues for no position.
• Avoid treating the dividend yield as a standalone catalyst. Monitor net debt-to-EBITDA, interest coverage and payout growth at the next earnings release; a financing-driven slowdown in dividend growth would likely compress SR’s utility-income investor base before long-term pipeline earnings arrive.