JPMorgan's Outlook on Utilities for 2025: Vistra, Entergy, NiSource, and PG&E

Analysts at JPMorgan, Jeremy Tonet and Richard W. Sunderland, have expressed optimism about the future of utilities in North America, envisioning a bright 2025 for the sector.

They attribute this positive outlook to several factors, such as increasing demand for power and transformative growth drivers including electrification, the expansion of data centers, and the trend of manufacturing onshoring.

Among the utility stocks poised for growth, they highlight four main picks: Vistra Corp (VST), Entergy Corp (ETR), NiSource Inc (NI), and PG&E Corp (PCG). Let’s delve deeper into the reasons why these companies are favored for 2025.

1. Vistra Corp

Vistra is reportedly a key player due to its significant operations in Texas, making it JPMorgan's top recommendation. The company has unmatched exposure to the Electric Reliability Council of Texas (ERCOT), a strong integrated retail arm, and can leverage nuclear production tax credits from its acquisition of Energy Harbor.

The firm is on track to benefit from a substantial increase in baseload demand, a tightening power supply, and favorable pricing conditions in ERCOT. With predictions indicating double-digit EBITDA growth through 2026, Vistra's prospects of winning gas plant contracts and capitalizing on regional power price spikes position it favorably for future success.

2. Entergy Corp

Entergy has recently gained attention through profitable data center arrangements, notably a $10 billion investment by Meta Platforms Inc. in Louisiana.

JPMorgan emphasizes Entergy's capability to replicate such successful partnerships, which boosts load growth and industrial sales. The increasing demand in the Gulf Coast region and Entergy's proven engagement strategies contribute to its rising earnings guidance and customer base expansion.

3. NiSource Inc

NiSource is tapping into the demand for data centers in the Midwest, with projections of substantial generation needs due to growing load scenarios. The company anticipates an impressive annual EPS growth rate of 6% to 8% alongside an 8% to 10% CAGR for its rate base, making it a noteworthy mid-cap utility choice.

According to JPMorgan, there is potential for growth inflection for NiSource, particularly with forthcoming load announcements expected to act as catalysts for boosting earnings revisions in 2025.

4. PG&E Corp

PG&E stands out with a compelling forecast of 10% EPS growth and a promising path for funding, thanks to a recent successful equity raise.

JPMorgan believes that PG&E's investments in wildfire mitigation and its expanding data center pipeline may lead to significant gains. Furthermore, anticipated updates regarding its system investment requirements in the fourth quarter could be crucial drivers for growth into 2025 and beyond.

Overall, the four utilities highlighted by JPMorgan have the potential to thrive as they adapt to the evolving landscape of energy demand, positioning themselves for a prosperous future in the coming years.

utilities, investment, stocks