Utilities Prepare for a Strong 2025: Insights from JPMorgan

Analysts from JPMorgan, Jeremy Tonet and Richard W. Sunderland, foresee a bright future for utilities across North America in 2025.

With rising power demand coupled with significant growth factors such as electrification, data center expansion, and the onshoring of manufacturing, utility stocks are set for strong performance. The analysts have identified four utilities—Vistra Corp (VST), Entergy Corp (ETR), NiSource Inc (NI), and PG&E Corp (PCG)—as their top picks for 2025, and here’s a closer look at why they stand out.

1. Vistra

JPMorgan considers Vistra Corp to be a prime choice due to its substantial business in Texas. Vistra is ideally positioned, having significant exposure to the Electric Reliability Council of Texas (ERCOT). The company benefits from a solid retail business model and the potential advantages from its acquisition of Energy Harbor, which includes access to nuclear production tax credits.

With demand for power increasing, a tightening supply situation, and favorable pricing within ERCOT, Vistra is anticipated to thrive. The company’s forecast predicts double-digit growth in EBITDA through 2026, reinforcing its strong position to secure contracts for gas plants and take advantage of spikes in regional power prices.

2. Entergy

Entergy Corp has gained attention due to its recent agreements with data centers, highlighted by a major $10 billion investment by Meta Platforms Inc (META) in Louisiana.

JPMorgan emphasizes Entergy's capability to emulate such successful partnerships, which are likely to lead to increased load growth and annual growth rates in industrial sales. With demand surging along the Gulf Coast and frameworks that can be repeated, Entergy is expected to continue delivering strong earnings and expanding its customer base.

3. NiSource

NiSource Inc is riding the wave of growth driven by data centers in the Midwest, indicating significant needs for energy generation. The company is noted for its reliable annual growth of 6% to 8% in earnings per share (EPS) and a rate base growth of 8% to 10%.

According to JPMorgan, NiSource has significant potential for improvement, particularly as new load announcements are expected to drive upward revisions in earnings as we approach 2025.

4. PG&E

PG&E Corp presents a favorable outlook with a predicted 10% growth in EPS and a solid foundation for financing, thanks in part to a recent equity raise.

JPMorgan sees potential gains driven by PG&E's investments in wildfire prevention, its expanding data center projects, and the likelihood of a re-rating for the company. Important updates regarding necessary system investments in the fourth quarter are expected to serve as key growth catalysts for 2025 and beyond.

In summary, the outlook for the utility sector appears very positive as these companies prepare to meet increasing demands and capitalize on transformative industry trends.

utilities, stocks, growth