Market Overview - Wall Street closed the week on a positive note, with solid but unspectacular jobs data alleviating fears of a sharp labor market slowdown while maintaining expectations for Federal Reserve rate cuts [1] - The S&P 500 and Russell 2000 reached new record highs, with the S&P 500 rising 0.7% to above 6,970 points and the Russell 2000 increasing 1.2% to 2,635 [2] - Blue-chip stocks remained near record levels, with the Dow Jones Industrial Average around 49,555 and the Nasdaq 100 advancing 1% [3] Employment Data - December nonfarm payrolls increased by 50,000, slightly below the expected 60,000, indicating a continued cooling in employment growth [4] - The unemployment rate unexpectedly declined to 4.4% from 4.5%, suggesting potential stabilization in the labor market [4] - Consumer sentiment improved, with the University of Michigan index rising to 54, the highest level since September [4] Federal Reserve Expectations - Investors are nearly fully pricing in the Federal Reserve to keep interest rates unchanged at its late-January meeting, with expectations for two rate cuts later in the year still alive [5] Notable Company Movements - Vistra Corp. shares surged over 13% after securing a 20-year agreement with Meta Platforms Inc. to supply more than 2,600 megawatts of zero-carbon energy from nuclear plants [5] - Intel Corp. shares jumped 10%, reaching their highest levels since March 2024, following positive remarks from President Donald Trump about a meeting with CEO Lip-Bu Tan [6] Commodity Performance - Commodities saw gains, with silver rising 4% to $80 per ounce, gold increasing 0.6% to $4,500 per ounce, and copper climbing nearly 2% [6] - Crude oil was on track for a weekly gain, with WTI crude advancing by 3% on both Thursday and Friday [7] Major Indices Performance - Major U.S. indices showed positive performance on Friday, with the Nasdaq 100 up 1%, S&P 500 up 0.7%, Dow Jones up 0.6%, and Russell 2000 up 1.1% [8] - The Vanguard S&P 500 ETF advanced 0.7% to $638.49, while the Invesco QQQ Trust Series climbed 1.0% to $626.40 [9]

Core Viewpoint - Edison International (EIX) has been upgraded to a Zacks Rank 1 (Strong Buy), indicating a positive outlook on its earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system emphasizes the importance of changing earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - Institutional investors rely on earnings estimates to determine the fair value of stocks, leading to significant price movements based on their buying or selling actions [4]. Company Performance and Outlook - The upgrade reflects an improvement in Edison International's underlying business, suggesting that investors may respond positively by driving the stock price higher [5]. - The Zacks Consensus Estimate for Edison International indicates expected earnings of $6.10 per share for the fiscal year ending December 2025, with a 2.5% increase in estimates over the past three months [8]. Zacks Rank System - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with Zacks Rank 1 stocks historically generating an average annual return of +25% since 1988 [7]. - Edison International's upgrade places it in the top 5% of Zacks-covered stocks, indicating a strong potential for market-beating returns in the near term [10].

Core Insights - FirstEnergy Corp. has received approval from the Public Utilities Commission of Ohio (PUCO) for a settlement agreement that will provide $275 million in restitution and refunds to customers of Ohio Edison, The Illuminating Company, and Toledo Edison [1][2] Financial Impact - The settlement resolves four regulatory proceedings and will return $250 million directly to customers, with an additional $5 million in credits for residential customers [2] - Average residential customers using 1,000 kWh per month are expected to receive approximately $65.61 in bill credits over three months [3] - The settlement allocates $20 million for programs supporting low-income residential customers through bill assistance, weatherization, and energy efficiency initiatives [3] Company Strategy - FirstEnergy's President, Torrence Hinton, emphasized that the agreement allows the company to move past legacy issues and demonstrates a commitment to customer service and transparency with regulators [4] - The company plans to invest $14 billion in Ohio's transmission and distribution infrastructure, workforce, and facilities through 2029 to enhance energy resilience [4] Customer Bill Impacts - Following the settlement and the proposed PUCO rate review order, average monthly bill impacts for residential customers using 1,000 kWh per month will vary, with specific decreases and increases noted for different companies [5][7]

Core Insights - AES Corp. is a U.S. utility company with a focus on residential customers in Ohio and Indiana, planning to expand into energy solutions for data centers with an 11.1-gigawatt pipeline, including 4 gigawatts for hyperscaler customers [1] - Applied Digital is positioned as a more attractive investment in the AI energy sector, with its share price having nearly tripled over the past year compared to AES's 14% increase [2] - The difference in growth trajectories between AES and Applied Digital is attributed to Applied Digital's ownership of both power generation and AI data centers, enhancing its long-term outlook [4] Financial Performance - AES reported a 2% year-over-year revenue growth in Q3 2025, while Applied Digital experienced an 84% year-over-year sales increase during the same period, indicating a stark contrast in growth stages [5] - Applied Digital secured a significant 15-year contract with CoreWeave, projected to generate approximately $11 billion in revenue, showcasing its potential for higher earnings per megawatt compared to AES [6] Market Demand and Future Prospects - Applied Digital is witnessing "active and increasing hyperscaler interest" and "unprecedented levels" of demand for advanced infrastructure, allowing for further investment in data centers [8] - The company is also building its multi-gigawatt pipeline to support multiple lucrative deals, enhancing its competitive position in the market [7] - AES, while having a larger megawatt capacity, lacks the AI data center component that Applied Digital possesses, which is critical for future growth [9]

Core Insights - Exelon has appointed Tim Peterson as executive vice president and chief customer and technology officer, effective February [1][2] - Peterson will lead a newly aligned organization that integrates customer strategy and information technology functions to enhance service for Exelon's 10.7 million customers [2][6] Company Overview - Exelon is a Fortune 200 company and one of the largest utility companies in the U.S., serving over 10.7 million customers through six regulated utilities [6] - The company employs approximately 20,000 individuals focused on reliable and efficient energy delivery, workforce development, and community support [6] Leadership Background - Tim Peterson previously served as senior vice president, chief information officer, and chief technology officer at Xcel Energy, which serves nearly six million customers [3] - At Xcel, he led significant digital and IT transformation initiatives, including grid modernization and upgrades to customer and billing systems [3][4] - Peterson holds an MBA from the University of Minnesota and a BBA from the University of Wisconsin, and is a Certified Information Systems Security Professional (CISSP) [5]

Core Insights - Consolidated Edison's capital investment program is projected to enhance its core infrastructure and operational capabilities, resulting in improved service reliability and resilience against system stresses [1] - The company is pursuing a systematic capital investment plan with a robust expenditure of $38 billion through 2029, aiming for a total investment of $72 billion over the next decade to ensure reliable and clean energy delivery [2][7] Infrastructure Development - The company is constructing the Brooklyn Clean Energy Hub, a transmission substation that will bolster New York's power grid and facilitate the integration of offshore wind resources, with a capacity of up to 1,500 megawatts (MW) expected to be completed by 2028 [4][7] Renewable Energy Expansion - As industries increasingly adopt clean energy, Consolidated Edison is expanding its renewable energy portfolio to capitalize on economic and environmental incentives from the utility-scale renewable energy market [3] Regulatory Challenges - The company's pricing is regulated by state utility authorities, which can impact its ability to recover costs if actual expenses exceed expectations or are disallowed by regulators, potentially affecting earnings visibility [5][7] Stock Performance - In the past month, Consolidated Edison's shares have increased by 3.7%, contrasting with a 3.5% decline in the industry [6]

Core Viewpoint - American Electric Power's unit is set to acquire a significant portion of its option for solid oxide fuel cells in a deal valued at approximately $2.65 billion, which is part of its strategy to develop and construct a fuel cell power generation facility [1] Group 1 - The deal is focused on solid oxide fuel cells, indicating a strategic investment in advanced energy technology [1] - The total value of the transaction is around $2.65 billion, highlighting the scale of the investment [1] - This acquisition is part of American Electric Power's broader plans to enhance its power generation capabilities through innovative technologies [1]

Core Viewpoint - FirstEnergy Transmission, LLC has extended its exchange offer for up to $450 million of its outstanding 4.750% Senior Notes due 2033, allowing holders to exchange for registered New Notes under the Securities Act [1][2]. Group 1: Exchange Offer Details - The exchange offer was initially set to expire on January 7, 2026, but has been extended to January 21, 2026 [2]. - As of the original expiration date, approximately $449.48 million, or 99.88%, of the Outstanding Notes were tendered in the exchange offer [2]. Group 2: Company Overview - FirstEnergy operates one of the largest investor-owned electric systems in the U.S., serving over six million customers across several states including Ohio, Pennsylvania, New Jersey, West Virginia, Maryland, and New York [4]. - The company's transmission subsidiaries manage around 24,000 miles of transmission lines connecting the Midwest and Mid-Atlantic regions [4].

Summary of Bernstein Energy & Power: 2026 Outlook Industry Overview - The report focuses on the European Utilities sector, highlighting its performance and outlook for 2026 - Utilities are trading at a ~9% P/E discount to the broader market, with a projected ~7% EPS CAGR over three years compared to ~11% for the market [3][4] Key Highlights - **Performance in 2025**: Utilities were the second-best performing sector, outperforming the broader market by ~13 percentage points, driven by demand for earnings visibility amid macroeconomic uncertainties and growth prospects in grids and renewables [12] - **Investment Opportunities**: Electric networks (e.g., SSE, National Grid) are seen as offering the best risk-adjusted exposure, while renewables (e.g., EDP, Engie) also present significant opportunities [3] - **Top Picks for 2026**: - **SSE**: Target price of £2,600, with a 19.3% upside, focusing on regulated networks [6][9] - **National Grid**: Target price of £1,300, with a 13.9% upside, benefiting from US operations and RIIO-T3 price control [9] - **EDP**: Target price of €4.60, with a 17.5% upside, strong growth in renewables [9] - **Engie**: Target price of €25.10, with a 12% upside, expected earnings rebound from renewables [9] - **Severn Trent**: Target price of £3,200, with a 14.7% upside, entering a growth cycle in UK water utilities [9] - **RWE**: Target price of €50.00, with a 10.5% upside, improving capital allocation and investment discipline [9] - **Redeia**: Target price of €18.15, with a 19.6% upside, solid earnings growth expected [10] - **EDPR**: Target price of €13.50, with a 12.1% upside, high earnings growth anticipated [10] - **Terna**: Target price of €10.00, with a 10.4% upside, good earnings visibility [10] Least Preferred Stocks - Companies with significant merchant power exposure are viewed unfavorably, including Verbund, Fortum, Solaria, Centrica, and Naturgy [8][11] Market Dynamics - **Commodity Prices**: The report highlights the uncertainty surrounding commodity prices, particularly gas, which could impact power prices in 2026 [17][22] - **Gas Outlook**: European TTF gas prices are projected to decline from €29/MWh in 2026 to €27/MWh in 2029, with potential downward pressure from increased LNG supply [18][25] - **Power Price Sensitivity**: The report outlines the sensitivity of various companies to changes in power prices, indicating that top picks have limited exposure to falling prices [44][47] Regulatory and Policy Environment - The EU ETS carbon price is currently above €87 per tonne, with expectations of tightening supply in 2026 due to reduced emission caps and auction supply [39][43] - The report notes the potential for nuclear life extensions in Spain and Belgium, which could provide additional upside for certain companies [56][59] Conclusion - The European Utilities sector is positioned for defensive growth in 2026, with attractive risk-reward profiles and strong catalysts driven by the energy transition and rising demand from AI and data centers [15] - The sector remains undervalued relative to current electricity prices, with earnings expected to be supported by a stable inflation regime [15]

Core Insights - Black Hills Corp. has completed its Ready Wyoming electric transmission expansion project, which spans 260 miles and costs $350 million, enhancing interconnectivity between South Dakota and Wyoming [2][5][6] Project Overview - The Ready Wyoming project aims to provide long-term cost stability for customers, enhance system resiliency, and improve access to power markets [6][8] - Approximately $300 million of the investment is being recovered through the Wyoming Transmission Rider, with an additional $50 million expected to be recovered through base rates during the next rate review [8] Company Background - Black Hills Corp. is a growth-oriented utility company based in Rapid City, South Dakota, serving 1.35 million natural gas and electric utility customers across eight states [9]