Eversource Energy (ES): Navigating a Volatile Q2 Amid Regulatory and Rate Hike Tailwinds

Eversource Energy (ES), a regional utility giant serving New England, has entered 2025 with mixed signals. While its first-quarter results affirmed its dominance in regulated infrastructure, near-term stock forecasts suggest a bumpy ride ahead. Let’s dissect the data behind its Q2 outlook.

Q1 2025: A Solid Foundation, But Headwinds Loom

Eversource reported Q1 EPS of $1.50, in line with expectations and up 0.7% year-over-year. Revenue soared 23.7% to $4.12 billion, driven by rate hikes and infrastructure investments in electric and natural gas segments. Key drivers:

• Electric Transmission: Revenue rose 12.8% to $199.4 million, fueled by capital investments.
• Electric Distribution: Up 12.1% to $188.4 million, benefiting from rate increases in New Hampshire and Massachusetts.
• Natural Gas Distribution: Grew 14.6% to $218.4 million, driven by infrastructure spending.

However, the water segment faltered, dropping to $3.6 million, and parent company losses widened to $59 million due to rising interest costs from offshore wind projects.

Q2 2025 Forecasts: Bulls and Bears Clash

The stock’s path in Q2 is contentious. Analysts and algorithms paint two scenarios:

Bearish Technical Outlook

• May 2025: Expected to trade between $54.93 and $59.08, averaging $57.09. A peak of $59.08 on May 3 (0.45% above the $58.82 May 2 close) may offer a short-term buying opportunity.
• June 2025: Forecasts point to a dip to an average of $54.82, with a potential low of $52.01 (the year’s nadir). This aligns with 85% bearish technical signals, including declining short-term moving averages.

Bullish Contrarian View

A competing model predicts a $66.80 average for June, implying a +13.5% surge from current levels. This scenario hinges on successful execution of its $24.2 billion 2025–2029 capital plan, including the Aquarion water division sale, which could free up cash for shareholder returns.

Key Risks to Monitor

1. Interest Rate Pressure: Debt costs rose 28.1% year-over-year, squeezing margins. A Fed rate hike in 2025 could exacerbate this.
2. Regulatory Hurdles: New England’s regulatory environment remains uncertain, especially regarding offshore wind projects.
3. Dividend Sustainability: The $0.7525 quarterly dividend (yielding ~2.6%) is secure for now, but capital-heavy projects may strain cash flow.

Analyst Sentiment: Neutral Bias Dominates

Eversource holds a Zacks Rank #3 (Hold), with mixed revisions:
- Downgrades: JP Morgan cut its rating to Underweight, citing valuation risks.
- Stays Neutral: BMO Capital’s Market Perform rating reflects a wait-and-see approach.
- Consensus: Analysts expect $4.73 EPS for 2025, slightly below the company’s $4.67–$4.82 guidance, suggesting modest upside.

Long-Term Outlook: Steady Growth, But Not Spectacular

The company targets 5–7% annual EPS growth through 2029, using 2024’s $4.57 as a baseline. This relies on:
- Regulatory tailwinds: Rate hikes approved in Massachusetts and New Hampshire.
- Strategic divestitures: Exiting the water business to focus on core utilities.

Conclusion: A Hold for Now, but Watch the Dividend

Eversource’s Q2 faces headwinds, with a 3.6% year-to-date gain outperforming the S&P 500’s decline. However, the $52.01–$62.51 annual price range underscores volatility. Investors should:

1. Focus on the Dividend: The 2.6% yield offers stability amid uncertainty.
2. Wait for Catalysts: The Aquarion sale (expected in 2025) and regulatory approvals could shift sentiment.
3. Avoid Overpaying: The $59.08 May 3 peak marks a potential resistance level; dips below $55 may signal further weakness.

While Eversource’s long-term regulated utility growth story remains intact, Q2’s mixed signals warrant caution. Until technical resistance breaks or regulatory clarity emerges, hold the stock but keep a close eye on interest rates and capital returns.

Data as of May 2, 2025. Past performance does not guarantee future results.