Jefferies Downgrades Exelon to Hold Amid Rate Case Challenges
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4 hours ago
0mins
Should l Buy EXC?
Source: seekingalpha
- Rating Downgrade: Jefferies has downgraded Exelon from Buy to Hold, reducing the price target from $55 to $50, reflecting concerns over the company's future profitability, particularly following the withdrawal of the Pennsylvania PECO rate case, which indicates a more challenging affordability landscape.
- Valuation Appeal: Analyst Paul Zimbardo views Exelon as generally attractively valued at a ~15% estimated 2028 P/E discount to peers; however, with the majority of the rate base expected to undergo reviews in 2027, primarily in Pennsylvania and Illinois, investor sentiment remains cautious regarding its future performance.
- Market Reaction: Following the PECO rate case withdrawal and the negative rate case in Illinois in December 2023, investors are unlikely to give Exelon the benefit of the doubt, resulting in a significant discount on its stock, which reflects market uncertainty about the company's prospects.
- Legislative Impact: The passage of utility affordability legislation in Maryland highlights the contentious affordability environment within Exelon's service territories, with the analyst noting that despite the ~15% P/E discount, there are no positive catalysts to prompt a re-rating of the shares, leading to increased cautious headline risks.
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Analyst Views on EXC
Wall Street analysts forecast EXC stock price to rise
15 Analyst Rating
7 Buy
6 Hold
2 Sell
Moderate Buy
Current: 47.020
Low
39.00
Averages
49.46
High
57.00
Current: 47.020
Low
39.00
Averages
49.46
High
57.00
About EXC
Exelon Corporation is a utility services holding company engaged in the energy transmission and distribution businesses through its subsidiaries, Commonwealth Edison Company (ComEd), PECO Energy Company (PECO), Baltimore Gas and Electric Company (BGE), Potomac Electric Power Company (Pepco), Delmarva Power & Light Company (DPL) and Atlantic City Electric Company (ACE). Its segments include ComEd, PECO, BGE, Pepco, DPL and ACE. ComEd segment is engaged in purchasing and regulating the retail sale of electricity. PECO segment is engaged in purchasing and regulating the retail sale of electricity and natural gas. BGE segment is focused on transmission and distribution of electricity and distribution of natural gas to retail customers. Through its business services subsidiary, Exelon Business Services Company, LLC (BSC), it provides its subsidiaries with a variety of support services at cost, including legal, human resources, finance, information technology and supply management services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Jefferies Downgrades Exelon to Hold Amid Rate Case Challenges
- Rating Downgrade: Jefferies has downgraded Exelon from Buy to Hold, reducing the price target from $55 to $50, reflecting concerns over the company's future profitability, particularly following the withdrawal of the Pennsylvania PECO rate case, which indicates a more challenging affordability landscape.
- Valuation Appeal: Analyst Paul Zimbardo views Exelon as generally attractively valued at a ~15% estimated 2028 P/E discount to peers; however, with the majority of the rate base expected to undergo reviews in 2027, primarily in Pennsylvania and Illinois, investor sentiment remains cautious regarding its future performance.
- Market Reaction: Following the PECO rate case withdrawal and the negative rate case in Illinois in December 2023, investors are unlikely to give Exelon the benefit of the doubt, resulting in a significant discount on its stock, which reflects market uncertainty about the company's prospects.
- Legislative Impact: The passage of utility affordability legislation in Maryland highlights the contentious affordability environment within Exelon's service territories, with the analyst noting that despite the ~15% P/E discount, there are no positive catalysts to prompt a re-rating of the shares, leading to increased cautious headline risks.
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Jefferies Downgrades Exelon to Hold Amid Rate Case Challenges
- Rating Downgrade: Jefferies has downgraded Exelon from Buy to Hold, reducing the price target from $55 to $50, reflecting concerns over the company's future profitability, particularly following the withdrawal of the Pennsylvania PECO rate case, which indicates a more challenging affordability landscape.
- Valuation Appeal: Analyst Paul Zimbardo views Exelon as generally attractively valued at a ~15% estimated 2028 P/E discount to peers; however, with the majority of the rate base expected to undergo reviews in 2027, primarily in Pennsylvania and Illinois, investor sentiment remains cautious regarding its future performance.
- Market Reaction: Following the PECO rate case withdrawal and the negative rate case in Illinois in December 2023, investors are unlikely to give Exelon the benefit of the doubt, resulting in a significant discount on its stock, which reflects market uncertainty about the company's prospects.
- Legislative Impact: The passage of utility affordability legislation in Maryland highlights the contentious affordability environment within Exelon's service territories, with the analyst noting that despite the ~15% P/E discount, there are no positive catalysts to prompt a re-rating of the shares, leading to increased cautious headline risks.
See More
Exelon Stock Falls 3% Following Downgrades from Several Brokerages
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- Brokerage Actions: The decline in Exelon's stock is attributed to multiple brokerages downgrading their ratings on the company.
See More
Three Top Dividend Stocks with Growth Potential for the Next Decade
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- Equinix's Growth Potential: Although Equinix (EQIX) has a current dividend yield of only 2%, its average annual dividend growth rate of 11% over the past decade indicates strong market demand and profitability in the cloud computing and data center sectors, with projected revenue growth of about 10% this year.
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- Investor Confidence and Market Opportunities: The unique strengths and growth potential of these three companies attract investor interest, particularly against the backdrop of surging demand for artificial intelligence data centers, which is expected to drive both stock prices and dividends higher.
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- Sweepstakes Opportunity: Illinois residents can enter a sweepstakes for a chance to turn on the fountain during the event, with entries due by April 17, requiring correct answers to energy trivia questions, thereby enhancing community engagement and interaction.
- Cultural Performances: The event will feature artistic performances from local groups, showcasing Chicago's diverse cultures and is expected to draw thousands of visitors, further boosting the area's cultural appeal and tourism development.
- Customer Resources and Support: ComEd will provide customer resources and information on bill assistance at the event, helping residents learn about energy-saving programs, which promotes increased awareness of energy efficiency and strengthens the connection between the company and its customers.
See More
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- Financial Assistance Programs: In 2025, ComEd connected over 220,000 customers to more than $108 million in financial assistance, including a $10 million Customer Relief Fund that provided bill relief to over 30,000 customers, aimed at alleviating the financial strain from high energy bills following a harsh winter.
- Long-term Solutions: ComEd is collaborating with policymakers to develop long-term strategies to reduce energy costs, while introducing a new Low-Income Discount program that helps eligible customers lower their electric bills to 3% to 6% of their household income.
- Energy Efficiency Initiatives: Since 2008, ComEd's Energy Efficiency Program has saved customers a total of $12 billion on energy bills by providing tools and services that help families and businesses manage their energy use effectively, thereby reducing future costs.
- Customer Support Measures: ComEd offers various bill assistance options, including the Low-Income Home Energy Assistance Program (LIHEAP) and Supplemental Arrearage Reduction Program (SARP), to help customers manage past due balances and lower future energy expenses.
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