Scotiabank raised its price target on FirstEnergy Corp. shares to $56 from $55 while maintaining a Sector Outperform rating. The bank indicated its new target aligns with the highest analyst projection tracked by InvestingPro, and noted the stock is trading close to its 52-week high of $50.44 after delivering a 25.27% return over the past year.
The analyst update included a 2.5% increase to Scotiabank's estimates, translating into a forecast for roughly 8% earnings growth for the utility. FirstEnergy reported fiscal year 2025 adjusted earnings per share of $2.55, which matches both Scotiabank's estimate and consensus expectations. That result implies about $0.53 of EPS in the fourth quarter of 2025 according to the bank's math. Scotiabank highlighted a favorable PEG ratio of 0.44, indicating the stock is trading at a relatively low price-to-earnings multiple compared with its near-term growth rate potential.
A key driver of the analyst's revision was FirstEnergy's announcement of a nearly 30% increase to its capital expenditure plan. Management now expects capex-driven growth to sit near the high end of its stated 6%-8% range. Scotiabank observed this compares favorably with peer companies, which it estimates are investing at about 6.5%.
The revised capital plan also leaves room for upside from specific projects identified by the company, including potential benefits from West Virginia generation assets and transmission opportunities within the PJM regional market. Notably, the updated plan did not change the company's earnings-per-share compound annual growth rate.
Scotiabank said FirstEnergy appears to trade at approximately a 5% P/E discount versus peers, and that the firm's updated forecasts sit at or near Street highs.
In other company disclosures, FirstEnergy's reported 2025 adjusted EPS of $2.55 was at the high end of its revised guidance range, representing a 7.6% increase from the prior year's $2.37. Revenue for the year rose to $15.1 billion, up 11.9% from $13.5 billion the year before. The company also reaffirmed its 2026 adjusted earnings guidance of $2.62 to $2.82 per share, which the company characterized as roughly 9% growth relative to the original 2025 guidance midpoint.
Implications
The combination of a higher capex plan, upward estimate revisions and strong 2025 results underpins Scotiabank's decision to lift the price target. These developments are relevant to investors tracking utility capital allocation, power generation and transmission investment, and relative valuation versus peers.