Latest news with #PaulZimbardo
CNBC
5 days ago
- Business
- CNBC
Utilities are surging in 2025. Wall Street likes these dividend-paying stocks
Utilities are emerging as a hot play in 2025 as investors take notice of their role in powering the artificial intelligence movement – and many of the names also happen to pay attractive dividends. As the broader S & P 500 retreated on Tuesday, the Utilities Select Sector SPDR Fund (XLU) touched a fresh record. Utilities are the second-best performing sector in the S & P 500 in 2025, up more than 14% and outperforming tech's roughly 13% advance. The outperformance is greater still including utilities' 2.8% dividend yield. XLU 5D mountain The Utilities Select Sector SPDR Fund (XLU) in the past five days. "For the power sector we expect significant tailwinds in the second half of 2025," said Bank of America analyst Ross Fowler in a late June report, pointing to the likelihood of continued growth in electricity demand. "Despite significant positive returns so far this year, we continue to believe the power stocks have data center related catalysts across the second half." In addition, dividend-paying stocks are looking more favorable for investors who are on the prowl for income, anticipating the day when the yield on risk-free Treasurys declines. To that end, CNBC Pro used FactSet data to screen for names within the XLU ETF that have buy or overweight ratings from at least 51% of the analysts covering them, and a dividend yield of at least 1.5%. PPL Corp. turned up on CNBC's screen. Once known as Pennsylvania Power & Light, the utility's shares are up 10% in 2025, and the stock pays a current dividend yield of about 3%. The provider of power and natural gas in Pennsylvania, Kentucky, Rhode Island and Virginia reported adjusted earnings of 32 cents on revenue of $2.03 billion in the second quarter against consensus estimates of 39 cents a share and $1.81 billion in revenue. Nearly 59% of the analysts covering the PPL rate it buy, according to FactSet. Jefferies analyst Paul Zimbardo stuck with the stock, reiterating a "buy" rating and lifting his price target on Monday by $2, to $42, suggesting 16% upside from Monday's close. "PPL is one of our top utility ideas, offering under-appreciated regulated generation data center exposure with premium core utilities overall," he said. "PPL has visibility to 8% EPS growth with conservative assumptions while preserving an above-average balance sheet." The icing on the cake is a recently announced joint venture between PPL and Blackstone Infrastructure to build natural gas generation to power data centers. "It is clear that this is an early stage partnership, but there is real option value here," Zimbardo said. NiSource also turned up on the screen. More than seven out of 10 analysts covering the Indiana-based utility recommend it as a buy or overweight, according to FactSet. Shares are up 16% in 2025, and the stock pays a current dividend in 2.6%. Fowler of Bank of America reiterated a buy rating on NiSource in late June following meetings with top brass. "NI is fielding active interest from hyperscalers seeking sites in Northern Indiana, where fiber and transmission access are gating factors," the analyst wrote. "A large fiber network from Chicago through northwest Indiana enhances competitiveness." "Paired with a solid dividend and visible [free cash flow] growth, we view NI as a defensive name with embedded optionality from growth upside," Fowler said. Finally, Xcel Energy turned up on our screen. The Minneapolis-based stock has a following, with 65% of analysts rating it a buy or overweight, according to FactSet. Shares are up 9% in 2025, and the stock pays a current dividend yield of about 3.1%. Anthony Crowdell of Mizuho last week stuck with his "outperform" rating after Xcel posted second-quarter results that topped the Street's estimates. "The company now has visibility into $15B+ of additional [capital expenditures] not included in its current base plan," he said. "This includes generation capex from resource plans across its service areas, transmission and data center demand." With the increase in capital spending built into the rate base, "the company reaffirmed its long-term EPS growth rate of 6%-8% and continue to expect to be in the upper half of the range," Crowdell added. — CNBC's Michael Bloom contributed reporting.
Irish Independent
05-06-2025
- Business
- Irish Independent
Meta enters 20-year contract for nuclear energy as AI power demands increase
The parent company of Facebook, Instagram and WhatsApp will probably be paying about $80 (€70) per megawatt hour for energy from the Clinton plant in Illinois, according to Paul Zimbardo, an analyst at Jefferies, who made the forecast based on company guidance. That compares with the firm's estimate of at least $110 for Microsoft's deal for power from Pennsylvania's Three Mile Island plant. Constellation Energy operates both nuclear sites and hasn't disclosed details for either agreement, with chief executive officer Joe Dominguez saying in an interview that the contracts reflect 'the fair price of reliable clean energy', without providing more details. The pricing outlook for Meta and Microsoft is different because generating energy at Three Mile Island is requiring the restart of a reactor, Mr Zimbardo said. The cost to revive the plant is estimated at $1.6bn after it was shut in 2019 for economic reasons. Meanwhile, the Clinton site is already in operation. 'There's a difference between a restart and a normal, operating plant,' Mr Zimbardo said. Technology companies have shown that they're willing to pay hefty premiums for nuclear energy, which is generally more expensive than fossil-fuel generation. They're betting that the carbon-free electricity that comes from atomic plants will help them meet their ambitious climate goals even as demand climbs to power the AI boom. Wind and solar aren't available all the time, but data centres are humming around the clock, and 24/7 nuclear energy meets both power and climate requirements. 'We have to recognise that some things are going to cost more than others,' said Michael Polsky, CEO of the independent power developer Invenergy. He spoke at a national security conference in Washington on Tuesday. 'Nuclear will cost more than gas. So if we want nuclear power in the future, we have to admit it will cost more,' Mr Polsky said. ADVERTISEMENT Under the Meta deal, Constellation will invest in boosting Clinton's output. The company is also considering plans to build another reactor at Clinton, which already has federal approval for a second unit. Overall electricity prices in the region served by the Clinton plant have been climbing. Wholesale power climbed to $666.50 a megawatt-day for the grid operated by the Midcontinent Independent System Operator in an April capacity auction. That's up sharply from $30 a year earlier. The contract is Meta's largest power deal to date, according to Urvi Parekh, the company's global head of energy. The company is increasingly interested in nuclear to run its operations, and in December announced it was seeking proposals for as much as 4 gigawatts of new US reactors. So far it has received about 50 proposals from a range of companies, including Constellation. That initiative is aimed as bringing power onto the grid in the early 2030s, while the Clinton deal is seen as a near-term effort. With the subsidies set to expire, Meta and Constellation said they wanted to ensure the plant remained competitive.
Bloomberg
03-06-2025
- Business
- Bloomberg
Meta's Deal for Nuclear Power Is Likely Cheaper Than Microsoft's, Jefferies Says
By and Naureen S Malik Corrected June 3, 2025 at 12:58 PM EDT Save Surging demand for power to run artificial intelligence just prompted Meta Platforms Inc. to enter a 20-year contract with the biggest US nuclear operator, penning a deal that's likely to be priced at a cheaper rate than a similar agreement rival Microsoft Corp. entered last year. The parent company of Facebook, Instagram and WhatsApp will probably be paying about $80 per megawatt hour for energy from the Clinton plant in Illinois, according to Paul Zimbardo, an analyst at Jefferies LLC, who made the forecast based on company guidance.
Reuters
27-02-2025
- Business
- Reuters
Edison International misses quarterly estimates on higher costs
Feb 27 (Reuters) - U.S. utility Edison International (EIX.N), opens new tab missed adjusted profit estimates for the fourth quarter on Thursday, hurt by higher costs and interest rates. Sustained higher interest rates can weigh on utilities, as they make investing in the construction and maintenance of critical infrastructure, such as electrical grids, more expensive. The company, however, expects adjusted earnings per share for the current year to be in the range of $5.94 per share to $6.34 per share, higher than analysts' estimates of $5.68 per share. The new range has an incremental 44 cents from the recently approved TKM settlement of $1.6 billion, Chief Financial Officer Maria Rigatti said in prepared remarks. The TKM settlement refers to the costs the utility can recover after the Thomas Fire, Koenigstein Fire and Montecito Mudslides from 2017. While the company did not provide a breakdown of its quarterly expenses, it saw a nearly 7% rise in operating expenses from 2023, and a nearly 16% increase in interest expenses in 2024. The company also said that it was still undertaking a review of the fires in California, but as of February 27 had not determined whether its equipment was associated with the ignition of the Eaton fire. Its subsidiary, Southern California Edison, is facing multiple lawsuits alleging that its equipment was involved in the Eaton blaze, one of the major wildfires that swept across Los Angeles last month, and the smaller Hurst fire. The Eaton fire scorched about 14,000 acres, destroyed more than 9,400 structures and killed 17 people. Jefferies analyst Paul Zimbardo estimates the damage it caused would cost about $22 billion before any settlement discounts. The lawsuits allege that Edison was negligent for failing to properly maintain its transmission and distribution lines, and also seek damages for lost wages and costs to rebuild, among other things. The Rosemead, California-based company said that excluding adjustments, it reported a profit of $1.05 per share, lower than the estimates of $1.09 projected by analysts polled by LSEG.
Yahoo
28-01-2025
- Business
- Yahoo
AI-exposed power stocks rebound after DeepSeek release casts 'uncertainty' over industry
AI-exposed power stocks rebounded on Tuesday after getting crushed the previous day alongside a tech rout following the release of a new AI model from the Chinese upstart DeepSeek. Constellation Energy (CEG), the largest nuclear plant operator in the US, gained more than 1% after tumbling 21% in the prior session. Electricity and power generator Vistra Corp (VST) jumped 9% after sinking by a record 28%. Meanwhile, power equipment maker and servicer GE Vernova (GEV) gained more than 7%, following a 21% drop. In late January, DeepSeek released a new AI model that was competitive with those of US rivals and cheaper to produce. The model surged in popularity, rising to the top of US iPhone downloads ahead of OpenAI's ChatGPT, and won praise from prominent figures. American venture capitalist Marc Andreessen called the model 'one of the most amazing and impressive breakthroughs I've ever seen.' The developments have rattled investors, who bid up power stocks on the belief that US hyperscalers will pour money into building out data centers required for AI use, thereby driving a surge in energy demand. Power stocks are coming off a ripping rally in 2024 and start of the year, with Constellation, Vistra, and GE Vernova all having touched record highs just last week. Now, questions are emerging on whether long-term energy demand will be as strong as expected. "Hopefully we can kind of resume some of the upward [stock] trend, but this really does kind of cast some uncertainty into that thesis, which has become an investor's base case," said Paul Zimbardo, managing director for US power utilities and clean energy research at Jefferies. The analyst, however, noted data center deployment is "very likely intact" in the medium term. The question going forward is what happens in the later part of the decade and 2030s. He said, "Does that trend accelerate in the future? Does it kind of stabilize and even see some moderation of demand growth out later in the decade?" Wall Street analysts recognize estimates of data center energy usage are bound to change over time as the technology becomes more efficient. "AI is, of course, very nascent, young technology, which means that trying to estimate how much energy AI will ultimately need is very speculative," Pavel Molchanov, investment strategy analyst at Raymond James, told Yahoo Finance on Tuesday. "It's going to be a lot, and we should expect that electricity demand in the US and various other economies will accelerate as a result of AI. It's just a question of how much," he added. The increased energy needs are already visible. After nearly two decades of relatively steady demand, US electricity consumption jumped by 2% in 2024, according to government data. The Energy Information Administration forecasts electricity demand will continue growing at that rate in this year and 2026. Data center deployments are also happening at the same time that utility companies build out their electric grids and infrastructure. "All of this is a marathon rather than a sprint. It takes years to build data center projects, and it takes years to build power plants and transmission grids," said Molchanov. Ines Ferre is a senior business reporter for Yahoo Finance. Follow her on X at @ines_ferre. Click here for in-depth analysis of the latest stock market news and events moving stock prices Sign in to access your portfolio
