Wells Fargo Downgrades PG&E Stock Amid Wildfire Liability Concerns
On August 31, Wells Fargo downgraded PG&E (PCG) to 'Equal Weight' from a more bullish stance and cut its price target to $24. Analyst Shahriar Pourreza cited the failure of California's legislature to pass wildfire liability reforms as the main reason for the downgrade. Without these protections, PG&E remains vulnerable to costly third-party claims if future wildfires are linked to its equipment. The lack of legislative reform also threatens the stability of California’s $21 billion Wildfire Fund and increases regulatory uncertainty. This has led Wells Fargo to suggest that higher risk premiums should be factored into PG&E's valuation, making it harder for the company to secure low-cost financing for infrastructure projects like grid hardening. PG&E shares have fallen about 30% from their year-to-date high following the downgrade and are now trading below their 200-day moving average. While a $24 price target still implies an 80% upside, analysts expect downward revisions in coming weeks as peers incorporate California’s regulatory risks into their models.
Topics: stock downgrade utility sector wildfire liability reform