Consolidated Edison, Spire Downgraded to Underperform by BofA

Bank of America downgraded Consolidated Edison and Spire to Underperform, citing concerns over their financial performance. The utility companies' stocks fell 2.3% and 1.8% respectively. BofA analyst Ross Fowler sees challenges for both companies, with price targets of $101 and $76 for ConEd and Spire respectively.

Bank of America (BofA) has downgraded Consolidated Edison Inc. (NYSE: ED) and Spire Inc. (NYSE: SR) to Underperform, citing concerns over their financial performance. The utility companies' stocks fell by 2.3% and 1.8% respectively, following the announcements.

Consolidated Edison Inc.

BofA analysts downgraded Consolidated Edison Inc. from Buy to Underperform, citing a tougher regulatory backdrop and heightened affordability pressures in New York [1]. The firm also cut its price objective to $101 from $112, indicating limited upside under the current regulatory and political climate. The downgrade follows growing concerns over the company’s latest rate case filing, which included a steep first-year increase and has drawn strong pushback. The company’s proposal seeks an ~18% increase in electric revenue, largely driven by higher capital spending and a $434 million jump in property taxes, as well as a 10.1% allowed return on equity. In contrast, the New York PSC staff recommended a much smaller increase and a lower return on equity (ROE), stressing that “affordability must take presence.” BofA analysts warned that upcoming political changes could add further uncertainty. Four of the seven PSC commissioners, including the current chair, have terms ending in early 2027, meaning the 2026 gubernatorial election could reshape regulatory dynamics. The bank trimmed its EPS forecasts for 2025-2027 to $5.60, $6.01, and $6.31, respectively, and now projects a long-term EPS CAGR of 5.7%. BofA also lowered valuation assumptions, applying a 10% discount to Con Edison’s electric, gas, and steam businesses, mainly due to the significant amount of affordability issues in NYC and the ongoing rate case risk. While BofA acknowledged that Consolidated Edison continues to benefit from stable earnings mechanisms and a strong balance sheet, it said that the company’s targeted 8.2% rate base CAGR through 2029 looks "ambitious" given current regulatory and political conditions. The bank also pointed out that Con Edison Transmission (CET), the company’s transmission business, retains a 20% premium for its FERC-regulated cash flows, but added that “despite these offsets, downside risk outweighs reward under current policy dynamics.”

Spire Inc.

BofA Securities downgraded Spire Inc. from Neutral to Underperform and cut its price target to $76.00 from $81.00 following the utility’s $2.48 billion acquisition of Piedmont Natural Gas announced on July 29, 2025 [2]. The bank said it sees limited near-term earnings accretion due to premium purchase multiples, financing uncertainty, and modest synergy potential. It also cited below-average earnings growth, elevated funding costs, and execution risks from the company’s expanding footprint. BofA does not expect a material improvement in Spire’s return on equity until 2026, when Missouri’s future test year framework takes effect.

References

[1] https://za.investing.com/news/stock-market-news/bofa-doubledowngrades-consolidated-edison-on-regulatory-headwinds-shares-slip-3842704
[2] https://site.financialmodelingprep.com/market-news/fmp-bofa-downgrades-spire-to-underperform-following-acquisition