FirstEnergy Stock Slips After Wolfe Downgrade, But Retail Remains Optimistic

FirstEnergy Corp.’s (FE) stock dipped over 1% in early morning trade on Thursday after Wolfe Research downgraded the shares to ‘Peer Perform’ from ‘Outperform,’ citing concerns about the utility’s "low-quality" earnings from pensions and coal operations. 

The brokerage has put a fair value estimate of between $38 to $43 on the shares, according to a report by TheFly.

Jefferies also lowered its price target to $43, highlighting concerns about whether FirstEnergy can achieve its projected rate base growth, which could benefit from future demand tied to data centers. 

Both analysts noted that unresolved regulatory cases in Ohio remain a focal point, limiting broader investor interest in the stock.

FirstEnergy has been shifting away from legacy earnings sources, including its Signal Peak coal operations, which accounted for 27% of earnings in 2022 but are expected to decline to under 5% by 2024, according to Wolfe.

The brokerage flagged concerns about how FirstEnergy plans to replace these earnings, especially as sector peers project stronger growth trajectories.

FirstEnergy Corp. Sentiment and Message Volume on Jan.23 as of 9:50 a.m. ET | Source: Stocktwits

Despite the cautious outlook from Wall Street, retail sentiment on Stocktwits has turned ‘bullish’ over the past six months, up from ‘neutral’, as investors focus on the company’s broader operational developments.

The Ohio-based utility, which serves over six million customers in the Midwest and Mid-Atlantic regions, has been modernizing its infrastructure, including a $1.42 billion grid upgrade in Pennsylvania to boost resilience and integrate automated technologies.

FirstEnergy recently reported 4.3% revenue growth over the last year, maintaining a steady 4.34% dividend yield. 

While FirstEnergy’s stock is up more than 6% year-over-year, it has lost over 2% in the past six months, primarily driven by regulatory uncertainties and broader market challenges.

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