Xcel Energy Target Increased
Morgan Stanley Raises Xcel Energy Price Target to $89, Signaling Nearly 9% Upside
Anonymous
Morgan Stanley raised its price target on Xcel Energy (NASDAQ: XEL) from $87 to $89 on June 24, 2026, signaling nearly 9% upside from the stock's current price. The bank kept its "Equal Weight" rating, citing a fresh review of North American utility valuations after the sector fell 5.5% in May. Yahoo Finance reported the move as part of a broader reset of price targets across regulated utilities.
Xcel Energy is one of the largest regulated utilities in the US, serving 3.9 million electricity customers and 2.2 million natural gas customers across eight states. The company has raised its dividend for 23 straight years and targets 4–6% annual dividend growth going forward, according to Insider Monkey.
A $60 Billion Bet on Grid Growth
Xcel announced a $60 billion capital investment plan for 2026–2030 in October 2025. That is $15 billion more than its previous five-year plan. The money will fund grid modernization, clean energy buildout, and wildfire safety. Of that total, $5 billion is set aside specifically for wildfire risk reduction, according to Utility Dive.
CEO Bob Frenzel called the 2025 results a sign of "confidence in our long-term growth strategy." The company met its earnings guidance for the 21st consecutive year in February 2026, posting ongoing earnings per share of $3.80, up from $3.50 in 2024. Its 2026 EPS guidance sits at $4.04 to $4.16. Mairs & Power, an investment firm holding XEL shares, said the stock should benefit from "stable and visible earnings growth" from areas with "favorable regulatory oversight."
Data Centers and AI Demand Fuel the Bull Case
One major driver behind Xcel's growth plan is the explosion in data center demand. The company currently manages a 6 gigawatt pipeline of contracted data center load. That includes a major deal to power Google's facility in Pine Island, Minnesota. Utilities that can sign large, long-term power contracts with tech companies tend to earn more stable returns, making them attractive to investors.
Colorado regulators are also crafting new "Large Load Tariff" rules to ensure data centers pay 100% of the infrastructure costs they require. The goal is to stop those costs from shifting to regular households. Xcel says this model will set a national precedent for how utilities handle the AI-driven surge in electricity demand.
Wildfire Lawsuits and Rate Hikes Cloud the Outlook
Not all the news is positive for Xcel. The company's Texas subsidiary faces a lawsuit filed by Attorney General Ken Paxton in December 2025 over the Smokehouse Creek Fire. That fire, sparked by a decayed Xcel utility pole in February 2024, became the largest wildfire in Texas history. A Texas court also ordered Xcel to inspect and replace at least 35,000 poles per year in high-risk areas, according to KAAL TV.
In Minnesota, regulators approved a two-year rate hike in June 2026 but slashed Xcel's original request by nearly 60%. The Minnesota PUC also capped executive pay at the Governor's salary level — about $2 million total. In Colorado, Xcel is seeking a $356 million, or 9.9%, annual revenue increase to pay for grid upgrades. Consumer groups say the hikes put too much burden on low-income households.
Wall Street Sees Value, But Risks Remain Real
The broader analyst community leans bullish on XEL. The median price target across Wall Street sits at $92, above Morgan Stanley's new $89 target. UBS analysts argue that wildfire liability risks are already "priced in" to the stock and that the market is undervaluing Xcel's 6–8% EPS growth target. The utilities sector's May selloff likely created a buying opportunity for long-term investors.
Still, the Smokehouse Creek trial is set for April 2027 and could result in major damages. Xcel is lobbying for "safe harbor" laws at the state and federal level. These rules would protect utilities from lawsuits if they follow approved wildfire mitigation plans. How that legal battle plays out could shape the company's earnings — and its stock price — well beyond 2027.
Sentiment
NeutralNEGATIVENEUTRALPOSITIVE
Publishers
5
Articles
3
Reach
5
Topics
A
AnonymousAuthor
