Sempra Bulls Hold Targets Despite Round of Cuts

SRE reports third-quarter results on November 4, and the clearest pre-earnings signal comes not from the lending market but from the analyst community: a wave of target reductions that leaves the stock trading below where most buyers on the Street expected it to be.

The target cuts have been broad. JP Morgan, Barclays, Morgan Stanley and Truist Securities all trimmed their price objectives through September and October, with JP Morgan moving from $113 to $99 and Barclays cutting from $103 to $90. None of those firms changed their positive ratings, each maintained Overweight or Buy. HSBC's initiation on October 22 at Buy with a $97.50 target added a fresh voice to the bull camp even as the reductions were still coming in. The one outright downgrade in the period was Mizuho, which moved to Neutral with an $84 target. The consensus is Hold, with eight analysts split between Hold and Outperform or Buy, and the mean target sits in the mid-to-high $90s against a current price of $86.06, implying genuine upside even after the revisions.

The debate between holders and skeptics comes down to two franchise-level questions. On the bull side, Sempra's 80% stake in Oncor gives it direct exposure to Texas electricity demand growth, and the infrastructure pipeline, including LNG development, provides a long-duration growth story. Regulatory clarity on California utility prudency standards has also improved the terminal-value calculus for the California utilities business. Bears point to a softer earnings trend at Sempra Infrastructure, where lower asset optimisation has weighed on net income, and to wildfire liability exposure in California. Rising net interest costs at the parent level are a secondary concern. The forward earnings picture is not uniformly weak, though: the factor score for 12-month forward EPS growth ranks in the 87th percentile, indicating analysts have meaningfully revised future estimates higher even as near-term results have disappointed. The EV/EBITDA multiple has drifted up modestly over the past month to 16.6x, which is not cheap for a regulated utility but reflects the longer-dated infrastructure optionality that supporters emphasise.

SRE has gained 10% over the past month and 2.4% over the past week. Close peers posted a median weekly gain of roughly 2.9%, so the stock has fractionally lagged its sector in the most recent stretch, with WEC up 4.5% on the week and CNP up 3.3%. Short interest is low at about 2% of the free float, borrowing costs are below half a percent, and availability is effectively uncapped, none of which points to meaningful short-side pressure on the name. The put/call ratio of 0.70 is almost exactly in line with its 20-day average, so options positioning is neutral rather than defensive.

The November 4 print will test whether the infrastructure unit's earnings stabilise or continue to drag, and whether management's project pipeline commentary is specific enough to justify holding targets that are, after months of cuts, still well above where the stock is trading today.