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Pinnacle West (NYSE:PNW) edges higher even after Barclays downgraded shares to Underweight from Equal Weight with a $78 price target on Tuesday, after the stock’s relative recovery since the 2021 rate case “has shifted the balance of risk to the negative” given the company’s plans to file another Arizona rate case by mid-2022.
“While the rate case planned for this year seems to be more straightforward than the last case and does not have to address recovery of investments in the Four Corners coal plant, the Arizona Corporation Commission and the inconsistency of rate orders will likely provide more risk to investors and outweigh any potential share upside,” Barclays analyst Eric Beaumont writes.
No real resolution or expectations on the outcome of the case will be known until December, and two of the five ACC seats are up for election in November, which Beaumont says will add more noise into the process this fall.
Also citing significant Arizona regulatory risk, Evercore ISI recently downgraded Pinnacle West shares.
