CIBC Downgrades Clearway Energy to Neutral Due to Valuation

CIBC downgraded Clearway Energy (CWEN) to Neutral from Outperformer due to valuation, citing the shares' 30% increase since January. The firm believes a growth acceleration or more visibility on the path forward beyond 2027 could push the stock higher. The price target remains unchanged at $35.

In a recent move, CIBC has downgraded Clearway Energy (CWEN) from Outperform to Neutral, citing valuation concerns. The bank's decision comes after the stock experienced a 30% increase since January, leading CIBC to believe that further growth acceleration or clearer visibility on the path forward beyond 2027 could be necessary to push the stock higher. Despite the downgrade, CIBC's price target for Clearway Energy remains unchanged at $35 [1].

Clearway Energy has been active in expanding its renewable energy portfolio. In April, the company announced the acquisition of a 100 MW solar project in California for approximately $130 million and completed the acquisition of the Tuolumne Wind Project from Turlock Irrigation District. Additionally, the company signed a 335 MW power purchase agreement with Microsoft [1].

The company's recent earnings reports have shown positive signs. For the first quarter of 2025, Clearway Energy reported earnings per share (EPS) of $0.03, compared to FactSet's estimate of a loss of $0.25, and revenue of $298 million, versus FactSet's estimate of $306.0 million. The company has also reaffirmed its earnings guidance for the year 2025 [1].

However, the investment community will be closely watching Clearway Energy's earnings performance in its upcoming release scheduled for August 5, 2025. The company is predicted to post an EPS of $0.81, indicating an 88.37% growth compared to the equivalent quarter last year. The consensus estimate calls for quarterly revenue of $434.4 million, up 18.69% from the year-ago period [2].

Analysts have noted that recent changes in estimates for Clearway Energy should be monitored by investors. The Zacks Rank system, which considers these estimated changes, currently rates Clearway Energy as a Hold (Rank #3) [2].

In terms of valuation, Clearway Energy is currently trading at a Forward P/E ratio of 26.68, which is higher than the average Forward P/E ratio of 19.79 for its industry. The company's PEG ratio of 0.7 is also lower than the industry average of 2.4 [2].

Overall, while CIBC's downgrade reflects concerns about valuation, the company's recent acquisitions and strong earnings performance suggest that it remains a key player in the renewable energy sector. Investors should continue to monitor the company's earnings releases and other developments to assess its long-term prospects.

References:
[1] https://www.marketscreener.com/news/cibc-downgrades-clearway-energy-to-neutral-from-outperform-35-price-target-ce7c5cdfd181fe25
[2] https://www.nasdaq.com/articles/why-market-dipped-clearway-energy-cwen-gained-today