As previously reported, Morgan Stanley analyst Stephen Byrd downgraded Entergy (ETR) to Equal Weight from Overweight while raising his price target for the shares to $115 from $114. He also upgraded NRG Energy (NRG) to Overweight from Equal Weight and raised his price target for the shares to $49 from $47. Sector outperformance relative to the broader market has resulted in a very high relative valuation for the lowest risk stocks, leaving opportunities to invest in U.S. utility stocks that have been "left behind," contends Byrd. Entergy has outperformed the UTY index year-to-date by about 14%, while NRG has underperformed by 16% year-to-date versus its closest peer, Vistra Energy (VST), explained Byrd. He also increased his price target on Xcel Energy (XEL) to $63 from $60, on Ameren (AEE) to $80 from $78 and on CMS Energy (CMS) to $63 from $59 as he sees these Midwest utilities offering above-average earnings growth. Byrd still recommends investors avoid utility stocks with "fat tail risks," including Edison International (EIX), PG&E (PCG), Pinnacle West (PNW) and Southern (SO).

Southern Company announced is increasing its dividend by 8 cents per share on an annualized basis to a rate of $2.88 per share. Southern Company also announced a regular quarterly dividend, including an increase of 2 cents per share over the prior quarter, of 72 cents per share, payable June 6, 2024 to shareholders of record as of May 20, 2024.

Barclays raised the firm's price target on PG&E to $20 from $19 and keeps an Overweight rating on the shares as part of a Q1 preview for the utilities group. The analyst expects weaker quarter results for the sector due to "underwhelming" weather to start the year. However, the firm does not see many companies trending lower in the fiscal 2024 earnings range.

Barclays analyst Nicholas Campanella raised the firm's price target on Edison International to $72 from $70 and keeps an Equal Weight rating on the shares as part of a Q1 preview for the utilities group. The analyst expects weaker quarter results for the sector due to "underwhelming" weather to start the year. However, the firm does not see many companies trending lower in the fiscal 2024 earnings range.