BofA Maintains Buy Rating on Eversource Energy (ES)

Why It Matters

The rating and adjusted targets highlight how regulatory changes and cost pressures are shaping earnings expectations for a major utility, influencing investor sentiment in the energy sector.

Key Takeaways

• BofA cut Eversource price target to $72, keeping Buy rating
• Q1 adjusted EPS forecast $1.58, slightly below consensus but up YoY
• Gains in natural gas distribution offset by higher interest expense
• FERC cut New England transmission ROE to 9.57%, a regulatory headwind
• Eversource reaffirmed 2026 earnings outlook of $4.80‑$4.95 per share

Pulse Analysis

Bank of America’s latest coverage of Eversource Energy (NYSE:ES) underscores a cautious optimism. On April 22, analyst Ross Fowler trimmed the price target to $72 from $73 while maintaining a Buy rating, reflecting confidence in the utility’s earnings trajectory despite a modest miss on first‑quarter adjusted EPS. BofA projects Q1 adjusted earnings of $1.58 per share, a slight dip below consensus but an improvement over the same period last year, driven largely by stronger natural‑gas distribution results. The firm’s outlook remains anchored by a reaffirmed 2026 earnings range of $4.80‑$4.95 per share.

Regulatory headwinds, however, temper that optimism. The Federal Energy Regulatory Commission’s decision to lower the New England transmission return‑on‑equity (ROE) to 9.57% reduces the profitability ceiling for Eversource’s transmission assets, a factor highlighted by both BofA and Wells Fargo analysts. Wells Fargo recently cut its price target to $74 from $78, citing the ROE reduction as a potential drag on growth and noting limited prospects for remedial action in fiscal 2026. The lower ROE compresses margin expectations, especially for the capital‑intensive transmission segment, and may pressure future earnings guidance.

Eversource’s strategic maneuvers aim to mitigate these pressures. The company recently completed a $600 million parent‑level debt issuance and issued junior subordinated notes to shore up its balance sheet ahead of the pending Aquarion transaction, which remains excluded from the 2026 guidance. By filing a rate case for Aquarion and maintaining a long‑term EPS growth target of 5%‑7% through 2030, Eversource signals resilience and a focus on steady, regulated returns. For investors, the combination of a stable dividend, modest upside in the price target, and a clear regulatory outlook positions ES as a defensive play in a volatile utility market.