Summary: BMO Capital raised its price target on PPL Corp to $41 from $40 while retaining an Outperform rating. The move follows orders from the Kentucky Public Service Commission that trimmed the allowed return on equity in the KU/LG&E rate case and adjusted rates for capital riders. Those regulatory edits reduced the total proposed revenue increase by roughly 1%. PPL also amended a revolving credit facility and signaled support for a PJM special auction to add generation for data centers.
BMO's revision comes as PPL shares trade at $37.57, a price the stock held roughly 1% below its 52-week peak of $38.27. The firm left its Outperform recommendation unchanged even as the Kentucky commission's orders introduced modest changes to an earlier stipulated settlement.
Details from the Kentucky order
The Kentucky Public Service Commission posted orders related to the KU/LG&E rate case that altered the previously proposed terms. The commission lowered the allowed return on equity to 9.775% from 9.90% - a reduction of 12.5 basis points. In addition, the commission reduced capital riders, including the GCR, setting them at 9.675%, which the order described as a 22.5 basis point reduction from the previously authorized 9.425%. The commission cited the lower risk profile of these riders compared with other investments in explaining the change.
As a result of the reduced return on equity and the other adjustments, the order lowered the overall revenue increase by about 1%, to $232.8 million versus the $234.6 million in the original stipulation.
Analyst reaction
BMO Capital analyst James M. Thalacker said: "While we generally do not like to see settlements altered, the adjustments were minor/reflects lower risk and incrementally derisks PPL’s calendar." The firm kept its Outperform rating while nudging the price objective up by $1.
PPL is approaching an upcoming earnings report, expected in two days. Analysts covering the company maintain a bullish consensus on valuation targets, with projected price targets across the sell-side spanning from $34 to $44.
Credit facility amendment and financing details
In separate corporate developments, PPL and certain subsidiaries amended their revolving credit facilities to extend the scheduled termination dates for some commitments by one year - from December 6, 2029 to December 6, 2030. The amendment applies to a $1.5 billion credit facility arranged with Wells Fargo Bank and other lenders. Under the agreement, PPL Capital Funding, Inc. serves as borrower and PPL Corp as guarantor. The amendment also includes other changes specified in the revised credit agreement.
Support for PJM auction and grid reliability comments
PPL Corporation has signaled support for a proposal backed by President Trump and a bipartisan group of governors calling for a special auction run by PJM Interconnection to procure new generation capacity aimed at data centers. PPL President and CEO Vincent Sorgi said the company stands ready to help address generation shortfalls to bolster grid reliability. Company statements framed these moves as part of broader efforts to strengthen financial flexibility and support infrastructure needs.
Market context
Investors and analysts will be watching PPL's near-term earnings disclosure alongside the regulatory developments in Kentucky and the recent credit amendment. The combination of a modest upward revision to the price target, the commission's trimming of the ROE and riders, and the financing extension provides a snapshot of how regulatory, operational and financial actions are intersecting for the utility as it navigates both rate-setting processes and capital management.
Note: This article reports the items described above without additional commentary or projection beyond the documented actions and statements.