UBS upgraded PG&E Corp. to a Buy from Neutral and lifted its price objective to $23 from $20. The brokerage said anticipated modifications to California's approach to wildfire liability could meaningfully trim the utility's financial exposure and make the company more attractive to investors.
Analysts at UBS identified a possible second phase of wildfire legislation in California as a key factor that could further limit how much utilities are held financially responsible for wildfire damage. Those proposals are expected to expand on recommendations from the California Public Utilities Commission and reflect ongoing discussions among utilities, regulators and consumer advocates.
A report containing policy recommendations is scheduled to be delivered to the state legislature on April 1 by the California Earthquake Authority, the agency that manages the state's wildfire fund. UBS said that the policy changes under consideration could boost investor confidence by reducing the financial risks tied to wildfire liabilities - a central concern for PG&E in recent years.
In addition to policy-related drivers, UBS pointed to factors within PG&E's control. The bank noted a recently announced 1.8% reduction in bundled residential electricity rates, which UBS quantified as approximately $5.14 per month for a household using 500 kilowatt-hours. UBS also highlighted that current residential bundled electricity rates are about 13% below levels seen in January 2024.
On the balance sheet front, UBS said PG&E had improved its financial position, achieving funds from operations to debt of roughly 15% in 2025. The brokerage suggested that this level of cash flow relative to debt could support a potential credit rating upgrade from Moody's.
UBS adjusted its earnings expectations modestly higher, forecasting earnings per share of $1.79 in 2027 and $1.95 in 2028. The bank projects EPS growth of about 9% per year through 2030, a pace it said compares favorably with roughly 7% growth currently reflected in PG&E's share price.
Despite the upgrade and upward revision to its price target, UBS observed that PG&E's stock still trades at a substantial discount to the broader utility sector. The new $23 target implies the shares would trade at about a 27% discount to the sector's valuation multiple, an improvement from the approximately 35% discount implied by the prior $20 target.
Clear summary - UBS raised PG&E to Buy and increased its price target to $23, citing potential California wildfire policy changes that could reduce liability risks, improved company financials including a higher funds-from-operations-to-debt ratio, and stronger expected earnings growth.