Bank of America analyst Julien Dumoulin-Smith lowered his price target to $68 from $74.
ConEd on Monday closed at $72.89, down 2.1%. It has firmed 0.85% so far this year.
Smith noted that the stock climbed 2% in the 30 days through Oct. 15, while the S&P Utilities Select Sector Index slid 3%.
“We attribute much of the outperformance to non-fundamental factors, principally positive sentiment around potential inclusion in a widely-followed environmental, social, governance benchmark,” he said.
“ED has favorable ESG factors including renewables and transmission and distribution assets. But these are mitigated by the gas utility and development of fossil pipelines.
“Among utilities, ED has a more cautious regulatory setup into 2022, with a first-quarter rate case filing for its Con Edison Co. of New York, which should produce 85% of 2022 earnings per share.
“New York regulation has made it challenging to earn the regulatory allowed rate of return and we see specific Covid-related risks.
“Issues include recovery of $1.25-plus billion of bill arrearages as of September 2021 and foregone fee revenue (i.e. pre-tax earnings) of $7 per month since April 2020.
Morningstar analyst Charles Fishman puts fair value at $78 for ConEd.
“We continue to assume 4% annual adjusted EPS growth in 2021-25, near the bottom of management's 4%-6% guidance range,” he wrote in August.
“We remain concerned about the post-pandemic economic recovery in New York City. Con Ed's regulatory allowed returns are lower than industry average, but the overall regulatory rate structures in New York remain constructive.”