PG&E Corp’s stock rating and price targets were downgraded by Wells Fargo and BMO Capital Markets after California lawmakers failed to advance SB492, a bill intended to reform the state’s wildfire liability framework.
Wells Fargo lowered PG&E from Overweight to Equal Weight and reduced its price target to $24 from $25. BMO Capital Markets downgraded the utility from Outperform to Market Perform and cut its target to $21 from $28, citing unresolved wildfire risks. PG&E’s shares were trading at $16.60 on Aug. 28, according to BMO.
The proposed SB492 legislation aimed to address wildfire exposure by including a $6 billion per-event liability cap, banning insurer subrogation, and removing a 2028 sunset on the California Wildfire Fund. However, the bill failed to include key protections such as a replenishment mechanism for the fund after depletion or preservation of liability caps once the fund is exhausted. BMO now assumes unlimited wildfire liabilities for PG&E starting in 2030, estimating a $10 per share impact on valuation, up from $6 previously.
In valuation scenarios, BMO projects PG&E’s share price at $3 in an adverse regulatory and wildfire outcome, compared with $35 in a scenario involving constructive wildfire reform by 2027. The firm maintained its adjusted earnings per share estimates for PG&E at $1.65 in 2026, $1.82 in 2027, and $1.98 in 2028.
Wells Fargo also estimated PG&E could return up to $3 billion to shareholders through share buybacks by 2030, averaging roughly $700 million to $800 million annually. BMO anticipates a potential dividend of about $0.50 per share in 2027, with remaining capital directed toward buybacks.
Separately, Wells Fargo maintained an Overweight rating for Sempra and an Underweight rating for Edison International.
