WEC Energy Faces Regulatory Risks Amidst Downgrade by JPMorgan

In Friday’s trading, WEC Energy (NYSE:WEC) witnessed a 1.5% drop as J.P. Morgan downgraded the shares to Underweight from Neutral. The price target was adjusted to $84, lowered from $90. The downgrade was attributed to the disappointing outcomes of the Illinois rate case last year, which JPM believes has exposed vulnerabilities in WEC’s performance and has resulted in lower than expected guidance.

In light of WEC’s 6.5%-7% growth rate, JPM’s Jeremy Tonet acknowledges that offsets to the challenging Illinois rate case outcomes are post-2024 factors. He stated that the company’s updated outlook raises questions about the trajectory to regain WEC’s prior growth, particularly in 2025. According to Tonet, WEC’s potential to earn premium returns on equity on regulated electric assets is still intact, but the growth is more concentrated in later years and less differentiated from peers.

Tonet underscores that WEC Energy’s path in 2024 appears less certain than investors expect for a premium utility. While there is still potential to earn premium returns on equity on regulated electric assets, the growth is more concentrated in later years and less differentiated from peers.