Morgan Stanley trims Duke Energy target as utilities lag S&P
The investment bank lowered its price estimate to $132 from $141, maintaining an Equal Weight rating on the energy giant amid a broader review of North American utility valuations.
Morgan Stanley has reduced its price target for Duke Energy Corporation to $132 from $141, while maintaining an Equal Weight rating on the shares. The adjustment, announced on May 21, forms part of a wider revision across the North American Regulated and Diversified Utilities and Independent Power Producer sectors. The firm highlighted that the utility sector underperformed the broader S&P index during April, prompting a recalibration of valuations across the industry.
The update coincided with research released ahead of the American Gas Association’s Financial Forum. While Morgan Stanley acknowledged that vertically integrated electric utilities, such as Duke Energy, are positioned as key beneficiaries of the ongoing data centre wave, the immediate price target cut reflected recent market lag. The analyst noted that the sector continues to benefit from rising investment tied to this infrastructure build-out, now in its third year, with growth expectations rising alongside capital expenditure.
Duke Energy operates through two primary segments: Electric Utilities and Infrastructure, and Gas Utilities and Infrastructure. The company is frequently cited in retirement portfolio analyses as a stable blue-chip holding. However, the revised target suggests a more cautious stance on near-term valuation, balancing the long-term structural demand for power against short-term equity performance relative to the broader market.
This move follows a similar adjustment by Truist analyst Richard Sunderland on May 18, who lowered Duke Energy’s price goal to $137 from $142 while maintaining a Buy rating. The convergence of analyst sentiment indicates a sector-wide reassessment of pricing models as utilities navigate the transition of supporting increasing power demand from data centres.
Morgan Stanley’s broader research note also highlighted a divergence in investment appeal between traditional utilities and artificial intelligence stocks. The firm suggested that while utilities offer infrastructure stability, certain AI equities may present greater upside potential with less downside risk. This sentiment was mirrored in other adjustments, including a reduction in the price target for MGE Energy to $70 from $74, maintaining an Underweight rating.
