DTE Energy Co (NYSE: DTE) boasts an "excellent" track record of achieving its financial targets, but management's 2022 outlook may not be achievable.
Wells Fargo's Neil Kalton downgraded DTE Energy from Outperform to Market Perform with a price target lowered from $116 to $103.
DTE's 2022 financial metrics implies a 5 to 7 percent compounded annual EPS growth rate moving forward -- a target which "simply is not as visible" as competitors who face similar or better growth outlooks, Kalton said in a note. To achieve the targets, the company would need its Gas Storage & Pipelines (GSP) business and Power & Industrial (P&I) needs to develop new projects representing earnings of $60 million and $15 million, respectively.
While DTE's management team does have "some wood to chip" in its GSP business, a "thorough review" implies the outlook is "more challenged" than previously expected, the analyst wrote. Prior ROE assumptions in the core utilities business in the mid-10 percent range has proven to be "overly ambitious."
Bottom line, investors may want to consider moving to the sidelines amid expectation for the company to show a 4 percent CAGR earnings growth profile off 2018's midpoint guidance of $5.78 per share.
Shares of DTE Energy were trading down about 2 percent at $95.13 Monday afternoon.
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