According to a report released by Mizuho Americas on Wednesday, US oil and gas giant Chevron, pipeline operator Energy Transfer, solar technology company Nextracker, and utility company Edison International are the bank's top picks in the energy industry, and have been given a rating of "outperform".
According to a report released by Mizuho Americas on Wednesday, US oil and gas giant Chevron (CVX.US), pipeline operator Energy Transfer (ET.US), solar technology company Nextracker (NXT.US), and utility company Edison International (EIX.US) are the bank's top picks in the energy industry, and have been given a rating of "outperform".
Mizuho's target price for Chevron is $205, and the bank estimates that this oil giant will have an EV/EBITDA valuation of 4.8 times in 2025, which is about 5.0 times the valuation of international oil companies. The FCF/EV ratio in 2025 is 9.2%, with a discount of about 6.8% compared to its peers.
Chevron is still one of Mizuho's top picks, with a target price expected to be 10% or more higher than the market consensus.
For Energy Transfer, the bank's target price is $20 and believes that the company has opportunities for growth.
Mizuho also pointed out that the improvement in Energy Transfer's leverage prospects should result in a return on investment exceeding the current distribution growth rate of 3-5%. Analyst Gabriel Moreen stated that the bank believes Wall Street is underestimating Energy Transfer's influence on the data center/ artificial intelligence theme.
Mizuho's target price for Nextracker is $59. The bank stated that the company will benefit from the growth in solar demand to support the growth of data center/ artificial intelligence loads. "Demand will turn into an increase in bookings in 2025, with revenue recognition expected to be realized no earlier than the end of 2026."
Finally, Edison International's target price has been set at $85 by the bank, which believes that the company still has the potential for 5-7% EPS growth. Mizuho emphasized that the company's "strong capital expenditure plan and supportive regulatory environment in the coming years are key drivers that may improve profits."
Analyst Anthony Crowdell pointed out, "As investors seek utilities with robust capital plans and supportive regulation, we turn our focus to California and view Edison International as the best way to play the theme."