Morgan Stanley cuts MGE Energy price target to $70 as utilities lag S&P
The US-based utility holding company reported stronger first-quarter earnings driven by renewable energy rollouts, yet Morgan Stanley maintains a cautious stance on the stock.
Morgan Stanley analyst David Arcaro has reduced his price target for MGE Energy (NASDAQ:MGEE) to $70 from $74, while maintaining an Underweight rating on the shares. The revision, announced on May 21, follows a period where the broader utility sector underperformed relative to the S&P index in April.
The adjustment comes shortly after MGE Energy reported its first-quarter 2026 financial results on May 5. The company posted GAAP earnings of $1.32 per share, or $48.5 million in total, an increase from $1.14 per share, or $41.6 million, in the same period last year.
Growth in the electric segment contributed $5.5 million to the earnings rise compared with 2025. Morgan Stanley noted that this expansion was largely attributed to strategic capital investments that increased the company’s rate base, alongside the successful rollout of key renewable energy projects.
In contrast, net income from the gas segment remained steady, showing little change from the first quarter of 2025. MGE Energy operates as a public utility holding company with segments including regulated electric and gas utility operations, non-regulated energy operations, and transmission investments.
Despite the improved earnings figures, Arcaro’s downgrade reflects the firm’s broader concerns regarding the utility sector’s returns. The analyst’s update aligns with Morgan Stanley’s recent revisions for Regulated and Diversified Utilities and Independent Power Producers in North America, citing the sector’s inability to match the S&P’s performance during the month.
