FE Valuation Edge Narrows as Shorts Quietly Retreat

The analyst picture is broadly supportive, though the stock has drifted 6.4% lower over the past month. TD Cowen upgraded FirstEnergy to Buy on May 15 — even while trimming its target from $56 to $53. That tension (an upgrade paired with a lower target) captures the Street's mood precisely: directional conviction is positive, but the near-term price trajectory is uncertain following the pullback. The mean price target across analysts is $52.23, implying roughly 13% upside from the current $46.39. The factor score on forward EPS growth ranks in the 94th percentile, and the analyst recommendation divergence score ranks 93rd — both pointing to a setup where the Street's optimism is notably above-average relative to the broader universe. The PE has compressed to 16.4x, down about 1.1 turns over the past 30 days, while EV/EBITDA has eased to 10.6x. Neither multiple is stretched for a regulated utility.

The institutional base is well-anchored. Capital Research holds 13.6% of shares, BlackRock and State Street together another 15.5%. Most recently reported positions saw modest additions rather than trims — BlackRock added 881k shares through April, Allspring added 694k. Insider activity is less instructive here: the most recent filed transactions are from March, when the CFO and COO sold shares near $51 — well above the current level. Those sales look more like routine liquidity rather than a directional signal, and the net 90-day figure is skewed by a large equity award to the CEO in late February.

FirstEnergy reports next on July 30. The past two prints produced meaningful negative reactions — a 4.2% and a 1.0% one-day drop respectively — though the five-day aftermath was more severe (down 8.1% and 7.2%). That asymmetry between the immediate move and the multi-day drift is worth noting given the current setup: a stock trading at a discount to analyst targets, with shorts retreating, but a track record of selling off after results. The completion of the $4.8 billion transmission modernization program ahead of schedule, cited in recent weeks, reduces near-term capital intensity and supports the regulated asset base narrative heading into that print. Peer behaviour adds context: PPL and AEP both fell 2.2% on the week, DUK dropped 1.5%, while FirstEnergy posted a flat week — suggesting relative outperformance within the utility sector this week despite the month's broader underperformance.

The July earnings date now acts as the next key reference point: the question is whether the short unwind and options skew toward calls holds into a print that has historically produced multi-day selling pressure.