Morgan Stanley raises MGE Energy (MGEE.US) target price to $77, optimistic about profit growth driven by renewable energy projects.

Morgan Stanley has raised the target price for MGE Energy (MGEE.US) from $73 to $77, and simultaneously updated its target stock prices for North American regulated and diversified utility and independent power producer (IPP) sectors for January. Analysts added in their investor research report that the utility sector underperformed the S&P 500 index that month. Looking ahead to the fourth quarter financial reports, Morgan Stanley expects discussions on data center project reserves to stabilize, while noting that market concerns over energy affordability and political environment are intensifying. Financial data shows that MGE Energy achieved a profit of $135.9 million in the full year of 2025, equivalent to earnings per share of $3.72, compared to a profit of $120.6 million in the same period the previous year, with earnings per share of $3.33. In the fourth quarter of 2025, the company made a profit of $23.3 million, with earnings per share of $0.64, compared to a profit of $22.0 million in the same quarter the previous year, with earnings per share of $0.61. The electricity business segment showed significant improvement in performance for the full year. The segment's revenue in 2025 increased by $11.3 million compared to 2024, mainly driven by the operation of several renewable energy projects. Specifically, the Darien CECEP Solar Energy project in Rock and Walworth counties officially started operating in March 2025; a few months later in June, the Paris battery storage system also achieved grid connection and operation. MGE Energy holds a 25-megawatt CECEP Solar Energy generation capacity in the Darien CECEP Solar Energy project and an 11-megawatt storage capacity in the Paris battery storage system. The natural gas business segment also saw an increase in profit. The segment's revenue in 2025 increased by $2.5 million compared to the previous year, with a 14% increase in natural gas retail heat delivery volume. The company attributed this growth mainly to the relatively warm weather conditions in 2024 - the warm weather in 2024 led to a lower base in the same period, thereby enlarging the growth in 2025. MGE Energy operates as a public utility holding company, with its business segments covering four core areas: regulated electric utility operations, regulated natural gas utility operations, non-regulated energy operations, and transmission investments and other business segments.