UBS has re-rated Xcel Energy from Neutral to Buy and raised its 12-month price objective to $89.00 from $81.00. The firm bases the move on what it describes as an underrecognized combination of reliable regulated earnings growth and accelerating demand from data center customers.
At the time UBS published its view, Xcel Energy (NASDAQ:XEL) carried a market capitalization of $46.7 billion and a trailing price-to-earnings ratio of 23.3. The stock was cited in the note as trading at roughly $78.98, and UBS used a working reference price of $79.68 when assessing how much EPS growth is priced into the shares.
UBS notes that Xcel Energy’s business supports a fully regulated EPS growth rate of about 9%. Using its $79.68 reference, the bank estimates the market is assuming less than 7% EPS growth for XEL, implying a roughly 200 basis-point gap versus UBS’s forecast. The stock currently trades at about a 4% discount to the broader utility group, and it exhibits relatively low price volatility with a beta of 0.48.
Data center load growth is a key element of UBS’s thesis. Management raised its estimate of high-probability data center load upside to 4 gigawatts (GW) from 2 GW during its year-end call, a change UBS views as material to forward demand. The firm also points to investment opportunities tied to the SPP transmission footprint and state resource plans, and notes specifically an identified 2.1 GW in Colorado.
Dividend stability is another pillar of the investment case. InvestingPro data referenced by UBS shows Xcel has paid dividends for 54 consecutive years and currently yields 2.89%.
On valuation, UBS retains a 7% utility group premium in its analysis. The bank characterizes that premium as equivalent to roughly two P/E turns of potential re-rating should the market acknowledge the company’s growth trajectory and data center exposure.
UBS also addressed a lingering regulatory matter in Texas tied to the Smokehouse fire, stating that settlement or resolution likely represents a modest cash outlay of less than $0.1 billion.
Operationally, Xcel reported fourth-quarter ongoing earnings that matched analyst expectations and reiterated its guidance for 2026. UBS cites these outcomes as reinforcing the company’s steady execution and the case for the adjusted rating.
Investors assessing XEL should weigh UBS’s view that current market pricing does not fully incorporate the company’s projected EPS growth and near-term incremental load from data centers. The bank’s upgrade and higher target price reflect that analytical stance while also recognizing a typically low-beta profile and a long dividend history.