Sempra raised at Barclays as SIP sale unlocks Texas Capital acceleration

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Sempra (NYSE:SRE [https://seekingalpha.com/symbol/SRE]) +1.3% in Monday's trading as Barclays upgraded shares to Overweight from Equal Weight with a $101 price target, raised from $80, seeing the sale of a 45% stake [https://seekingalpha.com/news/4497655-sempra-to-sell-45-percent-stake-in-sempra-infrastructure-partners-in-10b-deal] in Sempra Infrastructure Partners for $10 billion providing ample cash to fund the business through 2027 without equity, and notes catalysts to re-rate shares from the current 10% P/E discount to an in-line multiple the next six months.

Barclays analyst Nicholas Campanella believes Sempra's (NYSE:SRE [https://seekingalpha.com/symbol/SRE]) recent underperformance creates an attractive entry point for investors to gain exposure to the Oncor asset, which could place shares asset base on track to comprise ~60% Texas by the end of the decade, pro forma the expected capital acceleration coming on the Q4 earnings call.

At a 15.5x P/E, or a ~10% discount to large cap electric and gas utilities, Campanella thinks Sempra (SRE [https://seekingalpha.com/symbol/SRE]) shares skew too cheap given the EPS trajectory above the formal 7%-9% long-term earnings per share compound annual growth rate, high rate base growth, no equity issuance in the next few years, and increased earnings mix towards high multiple, lower risk Texas assets, also noting a strong catalyst path with Oncor now in the settlement window at the Texas PUC and expectations that this can enable a robust 2027 EPS outlook by the Q4 call.

MORE ON SEMPRA

* Sempra: Strengthening Backbone Of U.S. Energy Infrastructure With $10 Billion LNG Infrastructure Deal [https://seekingalpha.com/article/4830730-sempra-strengthening-backbone-of-us-energy-infrastructure-with-10-billion-lng-infrastructure-deal]
* Sempra: No Longer A Buy Now (Rating Downgrade) [https://seekingalpha.com/article/4825993-sempra-no-longer-a-buy-now-rating-downgrade]
* Sempra Discusses On 2025 Value Creation Update Call (Transcript) [https://seekingalpha.com/article/4825199-sempra-sre-discusses-on-2025-value-creation-update-call-transcript]