Sempra Energy Stock Rises After Morgan Stanley Upgrades On Texas Data-Center Boom: Retail Cautiously Upbeat

Shares of Sempra Energy rose over 1% in early morning trade on Friday after an upgrade from Morgan Stanley. 

The brokerage upgraded the stock to ‘Overweight’ from ‘Equal Weight,’ raising the price target to $98, up from $85. 

Morgan Stanley highlighted the rising influence of data centers on the utilities sector, particularly in Texas, where Sempra Energy has significant exposure.

The brokerage anticipates robust growth for utilities supporting data centers, with Texas emerging as a focal point due to the state’s high concentration of such facilities. 

Sempra, as the majority owner of Oncor — Texas's largest electric transmission utility serving over 10 million customers, including data centers and large-scale power consumers—stands to benefit directly from this surge in energy demand. 

Sempra Energy Sentiment and Message Volume on Dec 13 as of 9:30 a.m. ET | Source: Stocktwits

Retail sentiment around the stock flipped to ‘extremely bullish’ from ‘bearish’ a day ago, as chatter also increased to ‘extremely high’ levels.

However, some users still have concerns about the company’s declining earnings over the last two quarters, which have missed estimates.

Sempra’s broader strategy in Texas also includes partnerships with utilities like CPS Energy and Sharyland Utilities, 

CPS Energy has plans to invest $1.3 billion over the next five years to expand transmission capacity by adding roughly 1 gigawatt of load-serving capability, to meet the escalating demand driven by data centers.

Sempra is also exploring renewable energy initiatives through agreements like its memorandum of understanding with Entergy Texas. 

Even amid falling profit, the company stock has managed to hold onto gains of 17% year-to-date. 

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